How COVID-19 Has Impacted the Cannabis Industry

April 3, 2020

Across the globe, we are facing unprecedented hardships trying to fight a war against an invisible enemy: the coronavirus (COVID-19). One of the many industries affected by the virus is cannabis. The industry is plagued by misinformation and regulations but is now dealing with the backlash of a global pandemic.

The World Health Organization (WHO) classifies coronaviruses as, “…a large family of viruses which may cause illness in animals or humans.  In humans, several coronaviruses are known to cause respiratory infections ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). The most recently discovered coronavirus causes coronavirus disease COVID-19” (1).

Humanities structure is no longer business as usual and civilians are being instructed to bunker down indoors to try to prevent further spread.

Aside from “stay-at-home” orders across the country, most Governor’s have ordered nonessential businesses to close down temporarily. Every state has a different classification over what is essential and nonessential to stay open. Among the few businesses that are considered essential, the cannabis industry has also fallen under this category in states with medical or adult use laws.

In an industry that is being restricted through federal and state laws, cannabis is rising to the occasion. The most important matter to cannabis facilities is their staff and keeping them safe.

Kyle Kazan, CEO of Glass House Group, has a health background as a first responder (2). This has helped his company implement important health safety measures such as having employees maintain distance from each other in their 505,000-square-foot greenhouse facility, remote work for their creative and accounting departments, and offering delivery services. “Our pivot right now is: Keep people safe, continue the supply chain and do the last mile. Bring the cannabis to them since they really can’t come to you or won’t come to you,” said Kazan (2).

In addition, Kazan is already looking into future business alternatives. “If we're ramping up delivery, then we can do virtual [interfacing]. When people have questions, we can do virtual conversations with our budtenders who can help with the delivery,” he said.

The rise in deliveries has been noticed in states where recreational and medical cannabis is legalized. Ganja Goddess, which is a cannabis delivery service operating in California, have seen at least a 10% increase in sales each week for the past three weeks. The delivery services’ CEO Zachary Pitts expects to see more than a 10% increase in the coming weeks as more and more people choose to stay home (2).

“It’s not like a panic-buying [situation],” said Pitts. “But it's definitely, ‘We’re going to be hanging out at home, and cannabis is a great activity to do at home. It’s something that doesn’t really require going out or seeing lots of people.’”

At Ganja Goddess, the team has made sure employees are aware of the company’s paid sick leave policies and encourage workers to stay home when they are ill.

With the increase in demand though, not all establishments are able to keep up with the influx of orders. This particularly has affected the same day delivery service option (3). CannaLogic, a multiservices cannabis point of sale (POS) software company, has helped companies continue to survive by expanding their services from in-house to same day deliveries. Cofounder Eitan Braverman said, “Even without the Corona affect, we have been seeing that it's the companies that are able to provide same day delivery that are keeping their customers. And cannabis companies who can't will likely not survive.”

COVID-19 has not just impacted cannabis enterprises, but has affected consumers as well. Recently, New Frontier Data administered a survey to discover how cannabis consumers were reacting to the virus and the uncertainty of what may come (4). According to those survey results, “a majority (60%) of them reported having purchased cannabis or cannabis products in the previous two weeks as a direct response to the COVID-19 outbreak. Medical cannabis patients were more likely to have stockpiled products in the past two weeks than were recreational consumers (65% vs. 47%, respectively).”

Furthermore, the survey stated that “while 33% of consumers reported extending their supply for up to two weeks, more than half (53%) stockpiled beyond two weeks’ supply. Roughly a fifth (17%) of consumers indicated that they had extended their supply for up to two months. Again, when segmented by user type, medical users were more likely to have extended their supplies by up to a month than were recreational consumers (22% vs. 13%)” (4).

Consumer participants were also asked how the coronavirus had affected their consumption habits, if there was any change at all. The survey found that “almost half (49%) responded that there was no change in their cannabis consumption, while 29% noted an increase and 20% a decrease. Among medical cannabis consumers, 39% reported consuming more often whereas 21% had decreased their usage. Among recreational consumers, 23% reported an increase compared to 19% seeing a decrease in their cannabis use” (4). In individuals who noted that there was an increase in their cannabis consumption, they also mentioned a rise in emotions, such as stress and anxiety provoked from the COVID-19 pandemic.

The coronavirus has inflicted strong repercussions across all industries. Between financial and economic damages, cannabis businesses are having to consider drastic alternatives to survive. With the increase in sales, some facilities are hiring more staff to better assist with the newfound demand. In Los Angeles, marijuana retailer Sweet Flower, recently hired a district manager for their retail operations. The company also looked into hiring more employees for their marketing department, store managers, and temporary workers. “We are hiring to give some of our staff a break, and so if people don’t feel well, they don’t have to come in,” said CEO Timothy Dodd. “We’re trying to be a responsible employer at this time” (5).

Cannabis manufacturer NewTropic has implemented additional shifts for their employees and hired five new associates. CEO Alex Rowland foresees that the company will be hiring at least 20 new employees over the next 45 days. “People are consuming a lot of cannabis right now,” Rowland said. “People still need to eat and they still need access to cannabis, so we’re rising to the occasion” (5).

Even though the cannabis industry is seeing a demand for its products, job security cannot be guaranteed. In March, the Seattle startup Leafly laid off 91 employees, which eliminated more than half of their staff. The company now employs 140 individuals. Their original staffing model included 300 employees. These layoffs are attributed to the hardships COVID-19 has caused. “We’re heartbroken to have to let so many talented people go in such an uncertain time,” Tim Leslie, Leafly CEO, said in a statement to GeekWire (6). “Although Leafly continues to grow and rapidly deploy pickup and delivery services for retailers and brands across North America, COVID-19 has rocked global financial markets and put further capital investments we were expecting on pause.”

As the coronavirus continues to infect more civilians and put us in a state of “new normal,” businesses will continue to try to help their patrons as best as they are able to in these uncertain times. The best that society can do now is to try to flatten the curve so that the COVID-19 pandemic can diminish and one day allow for us to return to “business as usual.”

References:

  1. https://www.who.int/news-room/q-a-detail/q-a-coronaviruses
  2. https://www.cannabisbusinesstimes.com/article/cannabis-coronavirus-sales-increase-delivery-retail/
  3. https://finance.yahoo.com/news/coronavirus-leaves-cannabis-companies-struggling-111100552.html
  4. https://newfrontierdata.com/cannabis-insights/covid-19-and-the-purchasing-practices-of-cannabis-consumers/?utm_source=New+Frontier+Newsletter&utm_campaign=1f67e20f56-EMAIL_CAMPAIGN_2017_11_01_COPY_01&utm_medium=email&utm_term=0_e61e943a42-1f67e20f56-120346837&mc_cid=1f67e20f56&mc_eid=a4b718bafe
  5. https://mjbizdaily.com/some-cannabis-businesses-add-employees-other-mull-layoffs-in-response-to-coronavirus/?utm_medium=email&utm_source=newsletter&utm_campaign=MJD_20200330_News_Daily
  6. https://www.geekwire.com/2020/leafly-lays-off-additional-91-employees-eliminating-50-percent-staff-2020/