How COVID-19 Affected the Cannabis Industry?
How COVID-19 Affected the Cannabis Industry?
Amid the public health crisis caused by the COVID-19 pandemic, economies worldwide have faced similar hardships. The unprecedented situation has already impacted a wide range of industries, including the cannabis industry. With the lockdown restrictions and orders to stay at home, businesses have had to deal with the loss of production and poor sales, among other challenges.
However, despite the negative implications, the coronavirus pandemic has been helpful to the cannabis industry in some ways. For example, the growth of the cannabis industry in 2020 outpaced that of 2019 despite the pandemic. This growth came about after states designated marijuana operators as essential alongside pharmacies, supermarkets, and liquor stress. This meant the Getkush Online Dispensary could stay open amid lockdown restrictions.
As the pandemic rages on, here is how it has positively and negatively affected the cannabis industry.
The pandemic reshaped the cannabis industry.
The cannabis industry was deemed to be an essential service by some states despite lockdown restrictions. This casting of marijuana as crucial put the sector in the same category as pharmacies and hospitals as a source of legitimate medicine. It moved from an alternative treatment to essential therapy, creating a mark of credibility and legitimacy among users and the general public.
The designation of cannabis as an essential industry is a recognition that it is here to stay. Today, there is a strong consumer preference for cannabis products while gaining the interest of professionals. Through this pandemic, the concept of medical marijuana has grown as more states permitting it as an essential business.
As more states legalize the use of medical marijuana, there is the hope of its growth into a billion-dollar industry. States are putting marijuana on the same footing as a federally legal industry such as alcohol. The passing of a relief bill by the House of Representatives allowed banks to provide services to cannabis industries in states where it was legal. This SAFE Banking Act was a crucial part of marijuana legalization.
The pandemic boosted Marijuana Sales.
The pandemic boosted marijuana sales that may persist into the future. People were stocking up cannabis products to limit any interaction with dispensaries with the risk of lockdowns. They considered marijuana to reduce the effects of the virus, with researchers looking at cannabis as a potential way to treat and prevent COVID-19 infections.
Apart from medical marijuana, there has been an increase in the demand for recreational marijuana. People focused on purchasing cannabis to make the lockdowns less boring. As a result, the cannabis industry saw explosive growth during the pandemic and is expected to continue as more states legalize the use of recreational marijuana.
The cannabis sales spiked around when the United States imposed stay-at-home orders as a reaction to COVID-19. Part of the sales was due to panic buying by customers before the industry was deemed a critical business. People are using marijuana for mental health needs, self-medication, or purely recreational. Hence, retailers are purchasing more cannabis products from companies than they were before the pandemic struck.
Coronavirus affected the cannabis supply chain.
The main impact of the COVID-19 pandemic on the cannabis industry was a disruption of its supply chain. With many factories closed across the country, there was a significant impact on production and distribution.
Due to the pandemic, it was difficult for cannabis companies to source raw materials for domestic production. Most companies producing vaping hardware and other packaging products for cannabis products are outside the United States because of the lack of facilities. When international lockdowns were imposed, it affected the supply chain and led to shortages.
Many companies operated at reduced efficiency due to the social distancing measures and the need to protect employees from the virus. As a result, companies have to find alternative production facilities such as hiring production units close to home to deal with the affected supply chain.
The pandemic increased the scrutiny of the cannabis industry.
Since cannabis retailers remained open during the lockdowns, there was increased scrutiny and inspections of the businesses. For example, the Federal Trade Commission (FTC) announced a crackdown on deceptively marketed CBD products. They increased scrutiny on claims that CBD oils, gummies, and balms, among other products, could treat serious diseases such as diabetes.
Therefore, the cannabis industry has been subject to rapidly evolving laws and regulations as they deemed it a significant business.
It led to the rise of marijuana tax benefits.
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States need tax revenue during the pandemic and targeted legal cannabis as an avenue of income. The potential tax revenues are crucial in the industry, and states have targeted it. A single weed dispensary can generate high sales that can be subject to tax revenue. The opportunity to legalize marijuana during the pandemic has led to a rise in marijuana tax benefits.
The Bottom Line
As the impact of COVID-19 continues to fluctuate across industries, the future of the cannabis industry looks bright. The industry sees demand for its products poised to increase, offering an opportunity for investors to support publicly traded cannabis businesses. The pandemic played a role in the cannabis boom as patients combined the herb in their daily routines. The cannabis industry moved from an illegal to an essential sector during the pandemic. Several cannabis retail outlets stayed open throughout the pandemic and adopted alternative ways of serving customers.
The post How COVID-19 Affected the Cannabis Industry? first appeared on Tekrati and is written by Ellyse