Deadline Alert:Michigan Marijuana Facility Applications Due… Download an Application Now

The Effects of Coronavirus on the Cannabis Industry

by Sarah Cawthon March 12, 2020

As the coronavirus known as COVID-19 continues to spark global concern, many industries, including the cannabis industry, will face the impact of the virus in the months to come.

Cannabis Product Supplies

A shortage of actual cannabis flower is unlikely because all legal cannabis products are produced in the state in which they are sold and will not be affected by import slowdowns.  corona-1

However, shortages in supplies for certain products are not immune to the slowdown. Nearly all vape batteries and cartridges are manufactured in China, and have already been affected by interruptions in the Chinese manufacturing sector due to mass quarantines in the country.

The break in production in China does not have to do with the products and materials becoming contaminated with the virus, but rather the factories where products are manufactured have been shut down to prevent its spread amidst the pandemic.

The US imports around 30 million Chinese vape pens, cartridges and batteries each month, but most shipments halted in mid-January and have yet to fully resume because of the coronavirus. This has resulted in a supply pinch that will likely raise prices as products become harder to obtain.

Additionally, many cannabis companies manufacture their packaging materials in China as well and the slowing in the production of those materials may result in a slowdown in stateside production.

The development of new cannabis products may be slowed as well, as designers and manufacturers are unable to rely on a steady supply of materials from China.

However, companies are beginning to look to Mexico, India and the United States to bridge the gap for their packaging needs until more Chinese factories reopen.

Cannabis Sales

Because cannabis is important for many individuals with severe health issues, the CDC has recommended that individuals stock up with at least a one-month supply of medical cannabis in case of emergency. Some cities saw cannabis sales increase shortly after the recommendation was issued with some individuals purchasing close to the limit.

Furthermore, regulating officials in most cities and/or states have made a public announcement confirming that medical marijuana businesses are "essential" and may remain open during their shut down of many other businesses. 

In New York, Gov. Andrew Cuomo announced an executive order directing the state's non-essential businesses to put in place telework policies. Businesses exempt from the list include grocery stores, media, banks and other financial institutions. A spokesperson for the governor who was reached for clarification regarding medical marijuana businesses stated, "registered organizations in the State's Medical Marijuana Program are essential medical providers and will be allowed to remain open."

Similarly, when San Francisco announced its "shelter in place" order this week, only "essential businesses" could remain open to support the public's needs. The list of essential businesses included grocery stores and gas stations, but did not specify medical cannabis businesses. A day later, the city revised its position and deemed cannabis "an essential medicine," allowing medical cannabis businesses to stay open. To confirm this for the public, the San Francisco Department of Health tweeted that dispensaries can "operate as essential businesses" while also suggesting social distancing recommendations be followed.

However, the fear of going out in public may cause some shops to see less traffic. To address this issue, some state marijuana businesses are expanding their delivery services. In Massachusetts, the state’s cannabis regulators have urged Medical Marijuana Treatment Centers that offer delivery to patients to consider a geographic expansion of their delivery service. The regulators stated the treatment centers can promote that delivery service and remind patients that they can acquire up to a 60-day medical-grade marijuana supply. 

Cannabis Legalization Campaigns

The COVID-19 outbreak has already impacted large events after the CDC issued recommendations to avoid large gatherings. Many companies have canceled key events and conferences to avoid public exposure based on the CDC’s recommendations. Marijuana legalization events and campaigns are in full swing as advocates prepare for the 2020 election.

If COVID-19 continues to spread to more American cities, there will likely be more larger events, gatherings and festivals that get canceled. Commercial shopping districts including large-scale malls are also beginning to see a downturn in pedestrian traffic, which may affect the ability of campaign advocates to collect enough signatures to qualify legalization initiatives for the ballot by their given deadline.

New York Gov. Andrew Cuomo indicated during a press conference that the state’s response to COVID-19 would take precedent and could potentially interfere with plans he had to work with legal cannabis states. Gov. Cuomo intended to speak with those in the industry to better learn from their experiences with legalization as New York moves ahead on reform.

Cannabis Business

It’s obvious the coronavirus will continue to affect the industry in these areas. Nonetheless, the industry will move forward and continue to find solutions quickly for any significant issues, as it already has. There’s still plenty of opportunity for cannabis business, and if you're stuck inside, you could use this time to build your business plans for your goals.