No industry has gone untouched as a result of the coronavirus, including the cannabis industry. Although it might not be at the forefront of most people’s minds, the cannabis industry has felt significant effects of the spread of COVID-19. The team at cannabis tours, a Barcelona-based cannabis tour company, has put together the top three ways the coronavirus could affect the cannabis industry.
Reduced Supply Chains
One of the first effects the cannabis industry felt from the coronavirus was supplies reduction. Many distributors had been relying on packaging and hardware manufactured in China. As the first hard-hit country of the pandemic, China swiftly shut down production, quarantining millions of workers. Naturally, these changes caused disruptions for cannabis business operations around the world.
While China has opened up again slightly, many factories remain closed. Cannabis businesses are therefore still contending with supply shortages and may have to do so for the foreseeable future.
An overall reduction in supply is only one facet of the problem for cannabis businesses. There’s also been a surge in demand for marijuana, hash, and other cannabis products in the U.S. and Europe since lockdowns were put in place. In the U.S., weed sales grew in mid-March, with the highest growth rate peaking at 64 percent the week ending March 16. Demand has tapered off since then, but demand is still high – especially as online ordering and home-delivery services expand.
Many cannabis distributors are worried that they won’t be able to meet customer demand with their supply shortage. If things continue this way, marijuana prices could go up.
Decline in Cannabis Events and Tourism
Another hard hit to the cannabis industry has been the decline in marijuana and cannabis-related tourism. With travel suspended in all parts of the world, the cannabis industry hasn’t been the only one affected. Tourism generates significant revenue for weed distributors and retailers, especially cannabis clubs and coffeeshops in touristy areas.
Many of these weed cafes, which rely on travellers to boost sales, have had to close during the coronavirus lockdown. The coffeeshops in Amsterdam were deemed essential and allowed to dispense pot for takeaway only. But Amsterdam appears to be an exception. Other cities, like Barcelona, have seen their cannabis clubs completely shut down. Many of these weed cafes are uncertain if they can afford to reopen once restrictions are lifted, having been shuttered for three months.
Retailers aren’t the only ones affected by the decline in cannabis tourism. Major events have been cancelled as well. The annual cannabis festival in Barcelona, Spannabis, was abruptly cancelled in March. SXSW, which has a cannabusiness track, was also cancelled in March. Other trade shows and expos were called off or postponed, leaving some hemp breeders without the opportunity to sell their products.
Just like tourism, these events have significant revenue potential for cannabis distributors and manufacturers. Their absence has left gaps in sales that businesses are struggling to fill.
The third major effect of the coronavirus on the cannabis industry is a political one. In many places, legalisation of marijuana use was underway before the coronavirus hit. As lawmakers deal with more pressing public health issues, initiatives and activities for legalisation have stopped. Activists can’t go out and collect signatures for their ballot initiatives, nor can they lobby their local lawmakers.
Despite the slowdowns in legalisation, however, there have been some positive political effects of the coronavirus on marijuana use. In the U.S., many states considered marijuana dispensaries as essential during lockdown, so patients who use marijuana for medical purposes could still access it. Some take that as a good sign that further legalisation of recreational marijuana use may not be threatened long-term because of the coronavirus.
The cannabis industry, like many other industries, will undergo shifts as a result of the coronavirus. So far the biggest effects of the pandemic on marijuana manufacturers and distributors have been reduced supply chains, decline in cannabis tourism and events, and a general pause on legalisation measures. Although right now it’s difficult to say exactly what these changes will mean, they could have lasting impacts on the cannabis industry.