Cannabis under Quarantine
Where cannabis goes during Covid-19 quarantines is anyone’s guess, but many states stand with patients and call it essential.
Cannabis markets are thriving in the time of Covid-19 — some good, some bad. Some businesses are reporting up to a 30% increase in sales and many of the marijuana stocks able to outperform the S&P. However, it’s important to remember that many cannabis businesses, especially those that are ‘plant-touching’ will be ineligible for any sort of federal stimulus. Additionally, cannabis businesses are still awaiting passage of the SAFE Banking Act, which has already forced the industry to become creative with their capital streams.
Small vendors were already forced to adjust within an industry that required large amounts of capital to comply with an ever-changing regulatory landscape, and with the crunch on capital, many of these are unlikely to survive.
In general, cannabis regulations are in a constant state of revision, and when regulations are legislation is in such states of flux, it is those with the deepest pockets that will have the ability to weather the storm. The problem is, there aren’t as many deep pockets in cannabis as one would think. Additionally many markets are stalled and legalization is being tabled because of more pressing matters at hand.
Many early vendors have already been feeling a cash and investment crunch, which real estate vultures were more than happy to oblige through ‘sale leaseback’, a practice where real estate firms would buy the property and lease the land back to the original owner, giving them a large infusion of capital and reduction in capital expenditures.
The silver lining in all of this is the acknowledgment of many states that cannabis is an essential product. This also allows people employed in the industry to continue to work as long as their workplace can implement social distancing measures. In many states, they have allowed dispensaries to begin delivery or curbside service.
One thing is for certain, the line at my local dispensary sure did look healthy (and it wasn’t just the social distancing).
I’m curious what the data will bear out regarding the consumption methods during the time of Covid-19, and whether it will show a trend of people moving away from smoking (pre rolls) and vaping (cartridges) towards edibles and tinctures, or dry herb vaping.