CANNABIS INDUSTRY AND THE PANDEMIC CAUSE AND EFFECTS
With the pandemic still in full swing, every industry is undergoing a major revamped towards the “new norm.” However, the cannabis industry has a bizarre set of hurdles and possibilities in this crisis. Here is what you need to perceive the contemporary situation of the industry:
Cannabis Sales Will Still Be Erratic
While cannabis companies are declared essential services in most states where it is legal, hoarding is generating fluctuations in demand. When a certain State required dispensaries to be closed, there was a run on markets, and quite 1,300 applications for medical marijuana cards were made within ten days. Moreover, the sale trajectory for cannabis seeds— hybrids, white widow feminized, and autoflower strains is also affected by the “high and low” supply and demand.
Other states permitted dispensaries and seed banks to remain open. When a city or state initially ordered adult-use marijuana dispensaries closed, on the other hand, they quickly reversed the order after lines formed, creating a health risk.
Changing government policy and consumer fear will still cause swings in sales. Including disruptions within the labor pool for cultivation, processing, and shipping, cannabis product inventories are going to be unpredictable for a few time to return.
Consumer Behaviors Will Vary
Shelter-in-place and social distancing regulations have meant that consumers are not going into local stores. Many dispensaries have transferred to curbside pickup. Moreover, in states where it is legal, delivery is beginning. Technology firms that provide delivery technology are heeding an enormous spike in inquiries as stores scramble to supply this service.
While some consumers will return to visiting the shop to urge their weed, many will persist with the convenience and safety of delivery services long after the crisis has passed. This may even be fueled by stores that see the advantage of marketing to customers with loyalty programs provided through delivery apps.
The Crisis Is Driving Consumers To Other Forms Of Consumption
As it became clear that the pandemic affects people with respiratory problems harder than most, users became cautious of inhaled goods. Vapes concentrate, and smoked flower sales have flattened or may be dropped in some locations while edible and tincture sales have increased.
In addition, orders to shelter in situ mean that folks are inside with other relations much of the time. Smoking and vaping are being shunned while people endure in confined areas.
While some users will return to inhaled products after the crisis eases, some users will likely change behavior permanently due to new habits.
CBD Use Is On The Increase
The focus on staying fit and supporting immune systems is urging consumers to all or any kinds of health-focused products, and CBD is not any exception. While there is a lack of serious clinical research and conclusive data on the health benefits of cannabis products, CBD has been positioned as having several health-related benefits by manufacturers and retailers.
Moreover, while CBD stores have not been considered essential businesses, online orders are up significantly. Additionally, those brands that distribute through pharmacy and food stores have remained available to consumers, showing strong sales, which will likely continue.
Customers Will Look At More Valuable Goods
Over the last few years, there has been a glut of high-end premium-priced brands altogether cannabis categories and merchandise types. Even before the pandemic, experts have noted that the highest of the market was crowded and not sustainable.
With uncertain economic futures and substantial rates of unemployment, consumers will become cost-conscious. This may drive purchases into the value-priced mid-tier categories and even right down to the lower cost points. Albeit we see a robust recovery, consumers will likely stick with budgets for a few times.
Some Businesses Will Not Make It
While the cannabis market has been booming, it is still a fiercely competitive space, with many companies struggling to form it. Several cannabis companies have relied on the capital markets to fund growth. Regrettably, it is clear that capital markets are getting to take a short time to recover, leaving many businesses starving for cash. Moreover, since THC cannabis remains federally illegal, these companies are not eligible for the PPP and loan programs designed to assist rehabilitation.
In addition, companies were expecting a banking reform to get rid of the punitive tax code regulations, which can now be pushed into the distant future. Businesses that have overextended themselves will welcome the pinch. Expect many of them to move out of business or get acquired by healthier competitors.
While every great confusion to an economy will cull the herd and put many firms out of business, it also builds possibilities. Those that are during an excellent financial position to weather the storm and who can pivot their business to require advantage of openings will continue to proliferate and dominate the new industry.