The cannabis industry thrived in 2020, even as plenty of other industries struggled due to the coronavirus pandemic. One major reason for the success of cannabis businesses last year was the relaxation of state and local laws that otherwise would have limited the ability of dispensaries to stay open and operate during COVID-19.
To learn more about other important changes to the cannabis legal landscape in 2020, read the other entries in Scythian’s “2020 in Review” blog series: Part 1 on states voting to legalize cannabis and Part 3 on Congress voting to decriminalize cannabis.
Cannabis Industry Sees a COVID Bump: Dispensaries Have Record Sales in 2020
While many other industries have suffered financially as a result of the COVID-19 pandemic, the cannabis industry has actually seen a massive uptick in business. Some have referred to this as “the cannabis COVID bump.” So, what explains the cannabis industry’s COVID bump?
Countless retail stores, restaurants, and other brick-and-mortar businesses throughout the United States were forced to temporarily close their doors when state-ordered lockdowns went into effect at the beginning of the coronavirus outbreak. For many of these businesses, the temporary shutdowns ended up being permanent: the loss of revenues for weeks and even months meant that the stores were unable to reopen their doors even after the lockdowns were lifted.
By contrast, the cannabis industry saw a surge in revenues as dispensaries managed to remain open during the COVID-19 pandemic. That is because retail dispensaries were deemed “essential businesses.” The “essential” designation given to these legal marijuana providers meant that they could continue operating and selling adult-use cannabis to consumers. For states where medical marijuana is legal, one strategy employed to keep the businesses open during COVID was to classify dispensaries as pharmacies.
Since the start of the pandemic, cannabis businesses have seen a huge boost in sales. States like Colorado, Oregon, and Illinois have reported record-breaking month after record-breaking month for state-licensed dispensaries. In Colorado, state cannabis sales surpassed the entire total for 2019 by October 2020. One likely reason for the surge in cannabis sales during COVID is the fact that, for the most part, dispensaries have been able to remain fully operational and open to the public.
Cannabis Industry Adapts with Marijuana Deliveries
The cannabis industry also adapted during the coronavirus pandemic: door-to-door cannabis deliveries became common in states that allow them. Certain states, such as Illinois, Michigan, and New York, relaxed their previously strict rules that limited delivery options for cannabis businesses and customers. The thinking behind these regulatory changes was that by allowing cannabis deliveries, the state could ensure that customers would not have to venture outside and potentially risk spreading the coronavirus.
The same logic was used to justify a related change to state rules in Illinois, Michigan, and New York that govern the amount of marijuana that a customer can purchase at one time: by decreasing the total number of times that customers and dispensary employees need to interact with one another, the risk of spreading coronavirus was also decreased.
Cannabis Industry Gains Legitimacy with “Essential Business” Classification
Beyond the direct advantage of dispensaries being allowed to remain open and operational during COVID, the classification of dispensaries as “essential” also had an indirect advantage of further legitimizing the cannabis industry. For many in the industry, this classification could be seen by the public as symbolic and might help to embolden those who are seeking to legalize cannabis in more states and, potentially, at the federal level.
Contact Scythian Real Estate for Information on Cannabis Financing
Scythian Real Estate is a privately held cannabis real estate fund that provides financing and operational assistance to some of the country’s most sophisticated cannabis operators. For more information, email us today.
PLEASE NOTE THAT THIS BLOG IS NEITHER AN OFFER TO SELL NOR A SOLICITATION OF AN OFFER TO BUY SECURITIES IN SCYTHIAN REAL ESTATE FUND.
