The COVID-19 pandemic shocked the world and all its markets. The cannabis market has also experienced rapid changes, some of which are going to last.
The COVID-19 pandemic has decimated some economic sectors. On the other hand, some industries have experienced growth. The cannabis industry is decidedly one of the latter.
There are now many well-documented changes within the cannabis market. However, it’s important to distinguish which changes are temporary and which are expected to be longer-lasting. So, let’s start with the most immediate effects.
From the moment lockdowns were announced in the US, the cannabis industry has taken off. Cannabis companies were declared essential services in most states. Sales increased, and alleged hoarding resulted in a huge increase in demand.
In 2020, when Massachusetts ordered that dispensaries closed, 1,300 medical marijuana patients were registered. There, and in other states like Colorado, attempts to close dispensaries resulted in erratic increases in sales. In fact, Denver’s mayor reversed a decision to close dispensaries over the health risks of the long lines that inevitably formed.
The immediate effects of COVID-19 on the cannabis market can be defined by the erratic behaviour the market experienced. This, of course, was due at least in part to the chaos of regulatory responses to the emerging pandemic. However, wherever threats to cannabis supply emerged, we witnessed fast spikes in demand, through the rapid increase in sales.
Cannabis ingestible: increased demand
In addition to changes in overall demand, the immediate effects of the pandemic saw changes in the cannabis products that people bought.
One of the more pronounced changes was an increase in cannabis ingestible. For the first while, vaped cannabis products, smoked flowers, and concentrates saw a demand reduction. In some locations, sales of non-ingestible cannabis products either flattened or fell. However, sales of ingestible products increased across the board.
This increase in demand for ingestible cannabis products is believed to be the result of fears over the clear respiratory effects of catching COVID-19. In addition, as family members and roommates were forced to shelter together, many avoided smoking or vaping.
Many consumers in the cannabis industry are health-conscious. The focus on maintaining good health and having a strong immune system is more pronounced amid the pandemic. This is driving all kinds of consumers to health products. CBD is the cannabis market product that is benefiting from this trend.
Overall, the health effects of most cannabis products aren’t yet fully understood. The recent legalisation of the market in the US and several other countries has opened them to far more research. But these developments are relatively recent.
Within the cannabis industry, CBD is uniquely suited to meeting consumer demands for health products. There are many promising studies on the potential health benefits of CBD consumption. It has been particularly well-studied for its part in reducing seizures, anxiety, and pain, and fighting some inflammatory conditions. Amid these discoveries, cannabis businesses have successfully marketed CBD separately, and as a health product.
The result of these developments is greatly increased online orders of CBD products. CBD has made its way into health food businesses and pharmacies across the US. This trend will likely continue.
Of course, some of the above changes are temporary in nature. Life during the era of COVID-19 lockdowns naturally pushes people, including cannabis product customers, to changed behaviours and subsequent consumer choices.
Many of the effects of COVID-19 on the cannabis market were temporary and will perhaps revert over time. However, some trends have taken place and are likely to last.
Value-based consumer choices
Health considerations will naturally change as everyone emerges from the pandemic and its effects. However, the economic impact of the pandemic will be longer-lasting. Some businesses simply cannot make it through, and the broader economic impact is clear. This is primarily due to economic uncertainty and high unemployment.
During the pandemic, cannabis businesses providing the highest-priced products of all types experienced reduced sales and high inventory. Competition between top-priced brands rose to a level some experts viewed as unsustainable. Consumers, meanwhile, have demonstrated higher regard for high-value purchases.
As we move forward and economic uncertainty and unemployment remain concerns, demand for low- and mid-priced cannabis products can be expected to remain high. It’s possible that even in the face of a better-than-expected recovery, consumers will remain more price-conscious than in the past.
Online sales and delivery
The boom surrounding online shopping and delivery was set in motion well before the pandemic started. Now that it’s been shot into overdrive, demand for cannabis products bought online and delivered to your door has increased further. Where cannabis delivery is legal (under state regulatory conditions), this increased demand is likely to stick.
Some cannabis businesses won’t recover (or won’t come back)
Cannabis businesses, while legal on the state level, are still illegal on the federal level. This renders them ineligible for federal recovery loan programs, including being barred from the Paycheck Protection Program. Without this assistance, cannabis companies are far more reliant on consumers for their survival. Naturally, those businesses that are starved for cash are unlikely to weather the pandemic and its longer-lasting effects.
Some cannabis businesses will excel
The pandemic and its economic consequences can be described as a massive economic disturbance. And while every such disturbance will destroy some businesses, they also open up new opportunities in the market.
Cannabis businesses with the cash savings to make it through these challenges are in a better position going forward. Of course, reacting properly to the changes in consumer demands is also key. Many of those changes in consumer demands were temporary, but some will stick for a long time. Reacting well to the dynamism of the situation will help some segments of this industry excel.