3 Impacts of COVID-19 on The Cannabis Industry
So far, dispensaries are thriving during one of the most uncertain economic times in modern history.
California-based Harborside, with four stores and $60 million in annual revenue, reported sales were up 20-25% at all locations. Data from Treez software customers showed average order value and average gross sales from this past weekend exceeded last year’s 420 weekend.
Cannabis shoppers are stocking up in anticipation of a shutdown, or gearing up for a stay-at-home order. Besides sales trends, here are three impacts of COVID-19 on the cannabis industry.
Dispensaries = Essential Businesses
As of now, dispensaries are being deemed essential businesses or have been allowed to stay open due to legislative vagueness.
Of the ten states (plus Washington DC) with legalized marijuana, the majority have deemed dispensaries as essential businesses or listed them as exempt from the non-essential closures. Several states have relaxed restrictions around delivery and curbside pick so dispensaries can sell products while abiding by social distancing guidelines.
Two notable exceptions. Nevada closed storefront locations but allowed delivery to continue and Massachusetts closed recreational sales but permitted medical to continue.
The remaining 22 states with medical marijuana only are also open for business. Not all of these states have state stay-at-home orders so this could change. States such as Delaware and Louisiana have given no information about potential dispensary closures while other states have clarified they will be deemed essential when the time comes.
Stay up to date with local information as the situation continues. There’s a notable opportunity for dispensaries to thrive during this period, but that can change quickly. Proper preparation is crucial.
Some of the sales growth is likely the result of cannabis hoarding. Toilet paper isn’t the only item that people feel they need to stock up on during a potential crisis.
Vice covered a Canadian man who purchased enough flower to roll 3,500 joints. Another man is harvesting his marijuana plants to make up for lost profits from his Airbnb rental.
Federal and state restrictions prevent exorbitant hoarding in the U.S. And now that dispensaries are getting the essential business nod, extreme sales and hoarding behavior could potentially fade away.
However, the trend is still worthy of consideration because of the potential consumer changes down the road. More shoppers might take advantage of their live plant allotments and become home growers in the name of self-sustainability. Dispensaries should think about how they can cater to and monetize this potential behavior shift.
More Than Ever: Embrace Digital
Embracing digital means greater efficiency and more sales opportunities. As COVID-19 spreads, the digital opportunity represents much more.
Safer Transactions – A study found coronavirus can live on cardboard for up to 24 hours and up to three days on plastic and stainless steel. It’s not clear if this means the virus can be transmitted via paper money, but it’s not worth taking the risk. Enabling digital payments reduces the amount of cash changing hands. Dispensaries can also temporarily or permanently ban cash as a way to protect their staff.
Non-storefront Sales – Other states may follow Nevada’s lead by banning storefronts but allowing delivery and curbside options. Digital payments make the delivery process convenient and seamless. Drivers do not have to worry about handling cash. Curbside pickup is more streamlined and safer with digital payments.
Alt Thirty Six is at the forefront of helping dispensaries navigate this crisis. Now through April 20, 2020, all transaction fees for merchants on delivery transactions are waived. Additionally, Alt Thirty Six has increased internal resources to expedite the underwriting and approval process for merchants to begin accepting Alt Thirty Six payments within 24 hours. Click to Tweet
Alt Thirty Six is the leading digital commerce infrastructure for legal cannabis businesses and customers by enabling simple and secure digital purchases. Alt Thirty Six provides proprietary technology, partnership platform, and banking relationships to the legal cannabis industry, helping merchants manage digital payments in-store, online and via delivery services to grow and run their business efficiently and stay compliant. Consumers pay for their products with one click digitally, take advantage of loyalty programs and custom promotions. Follow Alt Thirty Six on Web, Instagram, Twitter and LinkedIn for important updates and relevant industry news.