How COVID Helped the Marijuana Industry Grow Up

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Photo by Beekman Foundation via Flickr

The pandemic was a disaster for most of the American economy — except for one industry.

Legal cannabis sales in the U.S. hit a record $17.5 billion in 2020, a 46 percent increase compared to the previous year, according to a report by BDSA, a cannabis sales data platform.

Much of the increase was powered by online ordering, reflecting the same surge in business experienced by major online marketers like Amazon. And in a sign of how a product once marketed in the shadows has now gone mainstream, many cannabis sellers faced the pandemic by offering delivery and curbside pickup.

For many, apparently, it paid off, The Crime Report found in interviews with industry leaders.

“We implemented curbside, delivery and online ordering in many of our markets,” Jennifer Dooley, chief strategy officer for Green Thumb Industries, one of the 15 largest commercial marijuana sellers in the world, said in an email interview.

“[That] certainly had a positive impact on our ability to serve more patients and customers throughout the pandemic.”

Green Thumb Industries wasn’t alone.

Eaze, a cannabis product delivery service based in San Francisco, reported a 60 percent increase in customer sign-ups during the 30 days following March 13, 2020, when the coronavirus pandemic was declared a national emergency and states began to shut down.

Throughout all of 2020, the company reported a 71 percent increase in new customer sign-ups.

Leafly, a website where people can learn about all things cannabis, found that established weed consumers increased their average monthly spending by 33 percent.

And business looks to get even better.

Onfleet, a San Francisco-based delivery management company, reported in an article by Forbes, that cannabis delivery is already up 25 to 30 percent this year compared to 2020. The company expects growth to continue.

Anne Fleshman

Anne Fleshman. Photo courtesy Flowhub

Anne Fleshman, Vice President of Marketing at Flowhub, a company focused on providing software for cannabis businesses, says online ordering became especially important during the pandemic, and she believes it will remain important coming out of it.

“I do think there has been a shift. There is less reliance on foot traffic and more reliance on digital channels,” Fleshman said.

“A lot of dispensaries are working on building up their website presence and focusing on their search engine optimization, especially locally, and they are focused on making sure they have great brand exposure and presence across directories.”

Dooley shared a similar message.

“Like many, the biggest change in our marketing strategy during the pandemic was shifting to a digital platform,” she said. “To best serve our patients and customers, we also accelerated the buildout of our omnichannel infrastructure, which included improvements to our e-commerce capabilities, customer service, delivery and curbside pick-up.”

Publications and weed industry experts argue that while the coronavirus pandemic may have accelerated growth trends within the industry, business was already increasing due to legalization and the evolution of convenient purchasing options.

“I think it’s important to note here that cannabis is growing year-over-year, it wasn’t like the jump from 2019 to 2020 was something surprising or unexpected,” Fleshman said.

“I do think that’s an expected trend.”

Marijuana Deemed ‘Essential’ Business

Currently, cannabis is legal for both recreational and medical use in 17 states and the District of Columbia. It is legal for medical use only in an additional 19 states.

A report jointly produced by Flowhub and two other cannabis-resource companies, found that in mid-March of 2020, there was a two-week “panic spike” in sales when the U.S. first began issuing stay-at-home orders and people wanted to stock up on essential products, including weed.

At the height of that peak, around March 15, there was nearly a 65 percent increase in nationwide cannabis sales compared to 2019.

The report found that following this spike, there was a decrease in sales toward the end of March, presumably due to shelter-in-place orders and the initial closure of in-person business.

However, many states deemed cannabis businesses essential and allowed them to continue to operate or to operate using curbside or delivery methods. Nevada only allowed cannabis companies to operate using delivery and Massachusetts closed recreational cannabis stores from March to May of last year.

pot

WEIGHING THE PROFITS. Photo courtesy Add Weed via Unsplash

There was a large spike in cannabis sales around April 20, the unofficial weed holiday, compared to 2019, and then sales seemed to stabilize at about a 40 percent increase compared to 2019 until mid-June, the length of the time the report tracked.

Another Flowhub data publication that tracked percent change in sales compared to 2019 for the rest of 2020, shows cannabis sales leveled out at about a 30 to 40 percent increase for the rest of the year.

And cannabis companies seem to be doing even better this year.

Cresco Labs, a vertically integrated multistate cannabis company, reported total revenue of $178.4 million during the first quarter of 2021, marking a 9.9 percent quarter-over-quarter and 168.8 percent year-over-year increase.

Green Thumb Industries, reported its total revenue for the first quarter of 2021 as $194.4 million, a 9.7 percent quarter-over-quarter and 89.5 percent year-over-year increase.

According to Flowhub’s customer database, cannabis sales are up 54 percent year-over-year for the period of Jan. 1 to May 31 this year compared to last, Fleshman reported.

Fleshman also said she believes cannabis sales will continue to grow over the years, as people let go of the stigma surrounding cannabis and it becomes more normalized.

Similar to other products, such as food and alcohol, that companies have found success in delivering, cannabis delivery is likely to continue to see growth after the pandemic.

“COVID has really accelerated preexisting trends towards convenience, legalization and payments,” Fleshman said. “Consumers want cannabis and they want cashless transactions. They want curbside. They want delivery. They want that instant gratification. They want to buy cannabis like they buy anything else.”

However, Dooley said her company is anticipating an increase in foot traffic, as people become more comfortable coming out of the pandemic.

An article by the New York Times stated stocking up on cannabis became as essential as stocking up on toilet paper for many American users.

“I think generally when thinking about the consumer and why there’s this big growth, especially during the pandemic, is I think consumers today are leaning toward items that make their whole life more comfortable as they’re staying in, and cannabis definitely fits in that category,” Fleshman said.

“It’s also been an incredibly stressful time for people and it’s something that is a natural product that can help folks deal with anxiety and many other medical issues.”

And it’s likely more people will try marijuana both recreationally and for medical use as legalization continues across the country.

“The largest driver of revenue for us and for the industry broadly is increased acceptance and consumption of cannabis as an alternative for alcohol, opiates and other products,” Dooley said.

“More people are open to trying cannabis than ever before.”

Three Million New Consumers

In line with this, Forbes found that more and more people are consuming weed. The article pointed to a BDSA survey that found the number of people consuming cannabis at the end of 2020 was greater than six months prior.

BDSA predicts more than three million new consumers will purchase cannabis in the U.S.’s legal market this year.

In addition, more people support marijuana legalization than ever before.

The number of U.S. adults who believe cannabis should be made legal in some form doubled from 2000 to 2019, according to the Pew Research Center.

According to another Pew Research Center study, published in April, 91 percent of U.S. adults believe that cannabis use should be legal in some form — 60 percent of surveyed adults believe it should be made legal for both medical and recreational use and 31 percent believe it should be legal for medical use only.

Although total cannabis sales in the illicit market are over double that of the legal market this year in the U.S., BDSA predicts that by 2026 legal market sales will pass that of the illicit market.

The company also predicts federal legalization by 2022, however, they expect this to take place by a state-by-state rollout with some states still prohibiting cannabis use.

“Getting deemed essential, I think was such an important historical moment for the industry,” Fleshman said. “It really proved it [is] a legitimate industry, even though it’s still federally illegal.”

Additional Reading: “Gun Rights and Medical Marijuana Advocates Join Forces”, The Crime Report, June 18, 2021

Blake Diaz is a TCR Justice Reporting intern.

One thought on “How COVID Helped the Marijuana Industry Grow Up

  1. Pingback: Gun Rights and Medical Marijuana Advocates Join Forces – The Daily Police

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