Many, if not all industries in the world have felt the impacts of the COVID-19 pandemic. While businesses in some industries have folded, others have experienced significant growth since the pandemic hit global proportions. Like other industries, the cannabis industry has felt its fair share of impacts due to the pandemic.
Companies that have continued to produce and distribute goods have to adhere to strict safety measures. These are the reasons why the cannabis industry has also had to make some significant adjustments to remain strong
As the saying goes, “The art of life lies in a constant readjustment to our surroundings.” Now, let’s consider the impacts of COVID-19 on the surroundings in the cannabis industry.
How Bad is it?
Quite recently, many governments legalized cannabis in many countries. Also, the industry has seen some progress in regulatory as well as legislative evolution. However, the impacts of COVID-19 wasn’t something most companies were prepared to deal with.
As the pandemic reached global proportions, many had to face the new realities of the future. But so did the governments in many countries, too. Generally, the authorities began to mount pressures on companies to follow COVID-19 safety measures.
The cannabis industry also had to follow these safety measures. The impacts of COVID-19 on the cannabis Industry were directly or indirectly as a result of changes the industry had to make for safety reasons. Below, you’ll find five of the most significant impacts.
1. Effects on Sales
It has been a surprising turn of events when it comes to the sales numbers recorded in the industry. Although not entirely unexpected, sales of cannabis products for one have spiked throughout Canada. Some States in the U.S. have recorded increased sales too.
Health Canada disclosed its most recent retail trade sales figures in May. Numbers recorded for cannabis stores show a rise in sales, especially in the month of March. The primary belief is, the industry saw this spike because users stocked up on cannabis products before the lockdown.
Also, the sector received more customers due to all the time spent at home. But, in all, the impacts of COVID-19 on the cannabis industry, concerning sales, have been positive so far. Although, many believe this is a one-time event. Analysts also revised estimation for the Canadian cannabis market. Many expect a drop in the initial forecast of $3.4 billion.
2. Effects on Supply
Cannabis products from CBDfx are essential in some States and Provinces. But, raw materials needed to produce them are not necessarily on the list of essential goods in their respective countries. This has affected the supply of cannabis-related products in many parts of the world.
Products like vape cartridges and battery packs have seen a fall in production. China is the primary producer and distributor of these essential materials. It is no secret that any blow to the Chinese supply market also affects the whole world’s supply chain.
The entire frenzy in China due to COVID-19 caused many businesses to close their doors, eventually. As a result, the price of supplies shot up, until suppliers ran out of supplies. Although many companies are back in business, they haven’t returned to full capacity.
In turn, cannabis businesses may soon come under pressure from high demand. Companies may have to cut back on the products they supply. Some producers have turned to more expensive suppliers just to keep up with the need for their cannabis products. No doubt, this decision has affected the price of their products.
3. Supply of Essential Products
Many states, provinces, and even whole countries began to go on lockdown due to the virus. Thus, some businesses had to take a closer look at the essential roles they played in the economy. Markets that were not essential to customers had to close down until further notice.
The cannabis industry also had its fair share of problems in this regard. Some States in the U.S. deemed the cannabis business dispensable, although, some counties of these States had a different opinion. Many citizens disagree with this decision because quite a significant number relied on cannabis products for their medical needs.
But in Canada, many Provincial regulators accepted the operations of cannabis businesses. Some of these Provinces later retracted that decision. Yet, licensed producers and retailers had the opportunity to keep operating and selling top sativa strains of 2020 in many areas.
The stores that could sell products did so within proximity to the store. Others had permission to make deliveries, but even that came with many rules and extra costs. Hence, these, directly and indirectly, affected the number of cannabis products sold from these businesses.
To say people have lost their jobs due to the pandemic would be an understatement. There have been mass layoffs. In some cases, entire production crews and their productions had to come to a halt.
Due to the situations at hand, there were no alternatives if the social distancing protocol was to be effective. This has been one of the impacts of COVID-19 on the cannabis industry. Any, if not all, expendable employees, were let go; some temporarily, others permanently.
Some companies did mass layoffs to cut down on operational costs. The cannabis market had fared better than some service-based businesses. However, it has the same challenges as any other business in other sectors of the economy. Producers and retailers who were able to maintain their labor force adopted new procedures and methods to adapt to the impacts of COVID-19.
5. Pressure on the Few Operating Businesses
When some U.S. States allowed only medical dispensaries to work, patient applications skyrocketed. Before, people could buy products from non-medical retailers and producers. Now, the majority have to rely on medical dispensaries for products.
Also, because few retailers could operate, they became the center of attention for producers. Non-medical growers in many parts do not have permission to work. Thus, medical growers have come under a lot of pressure.
The cannabis industry, like every other business, has felt the impacts of the COVID-19 pandemic. However, it has been able to make a lot of adjustments necessary to keep it from completely shutting down. This has been despite the existing challenges from law enforcement and regulatory bodies.
Nevertheless, the entrepreneurs in the cannabis industry have proven resourceful so far in dealing with these hurdles. Thus, many believe that with the right steps, the cannabis industry can bounce back stronger than ever. After all, what doesn’t kill you only makes you stronger.