At first, the COVID-19 business shutdown and stay-at-home orders increased sales for the cannabis industry. But the economic effects of the pandemic have caused many consumers to cut costs and expenses wherever possible, and cannabis businesses are worried that they will soon begin to feel these effects.
Forbes recently published a compilation of insights from six leading professionals in the industry regarding the effects of COVID-19 on cannabis businesses.
These professionals include:
- Morris Beegle (co-founder and president of WAFBA)
- Andrew DeAngelo (industry consultant and co-founder of Harborside)
- Katie Stem (CEO of Peak Extracts)
- Sam Ludwig (president of Aster Farms)
- Mary Jane Gibson and Mike Glazer (creators of cannabis podcast Weed+Grub)
While they all agree that the impact of COVID-19 will be significant, they offered different perspectives regarding both the current struggles and future prospects of the industry.
Here are 5 major highlights of the interview:
- Cannabis businesses will be hit particularly hard because of the inherent social element. On the commercial end, networking events and conferences are part of a critical marketing strategy for many companies, and a vast portion of business is conducted in-person. On the consumer end, product-sharing will need to adjust to social distancing guidelines and other public health recommendations.
- Cannabis may struggle less than luxury restaurants or products. Several of the professionals pointed out that consumers need cannabis more—not less—during a crisis, especially because the crisis has significantly impacted mental health. People rely on both recreational and medicinal marijuana to cope with isolation and stress. Furthermore, it is arguably a more solitary drug than alcohol.
- Smaller cannabis businesses will likely struggle to survive. Especially given recent tax increases and endless competition with the illegal market, cannabis businesses will need substantial resources to endure this temporary downturn. State governments may be relied upon more heavily for financial support, as the CARES Act does not provide relief for the cannabis industry.
- Like all industries, cannabis business owners will need to adapt in order to survive. Social distancing guidelines require businesses to implement mask protocol, limit the number of people that can enter a business at a time, and more. Beyond these measures, businesses can strengthen their online presence and add delivery services—although the latter will be difficult, because obtaining the requisite license is an extensive process.
- Cannabis must be federally legalized. The projected income in 2020 is $19 billion, which will provide revenue for the federal government and allow cannabis businesses to access federal relief, write-off opportunities, and other protections. All the interviewees hope to see the cannabis industry recognized as an essential service in the United States.
Our Firm Can Advance Your Business Goals
At Purdy & Bailey, LLP, we recognize the value and importance of your cannabis business. As attorneys, we strive to help our clients accomplish their entrepreneurial goals by minimizing liability and maximizing profit. Because cannabis is still federally illegal, these businesses face more obstacles than any other industry. We can put our decades of experience to work for you, helping you overcome these legal hurdles and ensure long-term growth.