The fastest growing product of the marijuana industry is none other than CBD products, so much so that it’s taken the place of the traditional marijuana and marijuana extracts. If you consider the growth of CBD products, since 2012 it has been increasing at a staggering rate. These days, you can walk into almost any dispensary and find that they have a section dedicated to CBD products, and some are even offering CBD edibles, making it easier for consumers to consume CBD products. This article will focus on how COVID helped the marijuana industry grow up with the establishment of these CBD products.
Legal Medical Marijuana in the United States is regulated in a manner which has remained largely unchanged for more than 30 years. The Controlled Substances Act (CSA) was passed in 1970, and has been amended predominantly since then with little attention paid to the social, institutional, or economic effects of the law. Most recently, the CSA has undergone a revision, the “Marihana” Act, which has been passed in the most recent session of Congress.The pandemic was a disaster for most of the American economy – except for one industry.
Legal cannabis sales in the US will reach a record $17.5 billion in 2020, up 46 percent from the previous year, according to a report from BDSA, a platform for cannabis sales data.
Much of the growth came from online orders, indicating the same increase in business as large online retailers like Amazon. And in a sign that a product once sold in the shadows is now commonplace, many cannabis retailers have seen a rush and are offering self-service deliveries and pickups.
For many, this has clearly paid off, as The Crime Report found when interviewing industry leaders.
We have launched online delivery and ordering in several of our markets, said Jennifer Dooley, chief strategy officer at Green Thumb Industries, one of the world’s 15 largest commercial marijuana sellers, in an email interview.
This certainly had a positive effect on our ability to serve more patients and clients during the pandemic.
Green Thumb Industries wasn’t the only one.
Eaze, a San Francisco-based cannabis delivery service, reported a 60% increase in registered customers within 30 days of the 13th Amendment. March 2020, when the coronavirus pandemic was declared a national emergency and states began to shut down.
In 2020, the company recorded a 71% increase in new customers.
Leafly, a website where you can find out everything you need to know about cannabis, found that regular smokers saw their average monthly expenditure increase by 33%.
And it looks like things will get even better.
Onfleet, a San Francisco-based delivery company, reported in a Forbes article that cannabis delivery is already up 25-30% this year compared to 2020. The company expects this growth to continue.
Ann Fleshman. Courtesy of Flowhub
Ann Fleshman, vice president of marketing at Flowhub, a company that specializes in providing software for cannabis businesses, says online ordering became especially important during the pandemic, and she believes it will continue to be important afterward.
I really think there is a change. We rely less on foot traffic and more on digital channels, Fleshman said.
Many pharmacies are working on building their websites and focusing on search engine optimization, especially at the local level, and ensuring their brand awareness and presence in directories.
Dooley shared a similar message.
Like for many others, the biggest change in our marketing strategy during the pandemic was the move to a digital platform, she says. To better serve our patients and customers, we also accelerated the implementation of our omnichannel infrastructure, including improvements in e-commerce, customer service, delivery and automated shipping.
According to publications and cannabis industry experts, while the coronavirus pandemic has accelerated growth trends in the industry, activity was already on the rise due to legalization and the development of easy purchasing options.
I think it’s important to note here that cannabis is growing year-over-year, not that the jump from 2019 to 2020 is anything surprising or unexpected, Fleshman said.
I think this is an expected trend.
Marijuana is considered to be a major business
Cannabis is currently legal in 17 states and the District of Columbia for both recreational and medical use. Nineteen other states allow it only for medical use.
The report, jointly produced by Flowhub and two other cannabis resource companies, showed that there was a two-week spike in panic sales in mid-March 2020, when the first stay-at-home orders in the U.S. were issued and people stocked up on essentials, including cannabis.
At the height of this peak, around the 15th. In March, cannabis sales across the country increased by nearly 65% compared to 2019.
According to the report, this peak was followed by a decline in sales by the end of March, likely due to home orders and the initial closure of a private store.
Nonetheless, many states have found the cannabis trade necessary and have allowed it to continue or home delivery methods to be used. Nevada allowed cannabis businesses to operate exclusively through delivery, and Massachusetts closed recreational cannabis businesses from March to May of last year.
TAKING INTO ACCOUNT THE PROFIT. Photo courtesy of Add Weed via Unsplash.
Compared to 2019, a large spike in cannabis sales was recorded around the 20th. April around, the unofficial weed holiday, then sales stabilized at about a 40 percent increase over 2019 through mid-June, the entire period tracked in the report.
Another data release from Flowhub, which tracked the percentage change in sales from 2019 to the end of 2020, shows that cannabis sales have stabilized at a growth rate of about 30-40% by the end of the year.
And it looks like cannabis companies will do even better this year.
Cresco Labs, a vertically integrated multi-state cannabis company, reported total revenue of $178.4 million for the first quarter of 2021, up 9.9% for the quarter and 168.8% for the year.
Green Thumb Industries reported total revenue of $194.4 million for the first quarter of 2021, up 9.7% from the previous quarter and 89.5% from a year earlier.
According to Flowhub’s customer database, cannabis sales increased between January 1 and May 31 of this year, a 54 percent increase over the previous year, Fleshman said.
Fleshman also said she believes cannabis sales will increase over the years as people shed the stigma around cannabis and it becomes more normal.
As with other products, such as edibles and alcohol, that companies have been able to supply, the supply of cannabis is expected to continue to increase after the pandemic.
Customers want to buy cannabis, just like everything else.
COVID has really accelerated previous trends toward convenience, legalization and payments, Fleshman said. Consumers want cannabis and cashless transactions. You need boundaries. You need a delivery. They want instant gratification. They want to buy cannabis just like everyone else.
However, Dooley said her company expects attendance to increase as people get out of the pandemic easier.
A New York Times article states that cannabis supplies have become as necessary as supplies of toilet paper for many American consumers.
I think when you talk about consumers in general and why there’s such a big increase, especially during a pandemic, I think consumers today tend to gravitate toward products that make their lives easier because they stay home, and cannabis certainly falls into that category, Fleshman said.
It is also an incredibly stressful time for people, and it is a natural product that can help people deal with anxiety and many other medical problems.
And it’s likely that more and more people will try recreational and medical marijuana as legalization progresses in the country.
The main revenue driver for us and the industry as a whole is the growing acceptance and use of cannabis as an alternative to alcohol, opiates and other products, Dooley said.
More people than ever are willing to try cannabis.
Three million new customers
Forbes found that more and more people are using weed. The article refers to a study by the BDSA which found that more people were using cannabis at the end of 2020 than six months earlier.
The BDSA predicts that more than three million new cannabis consumers will buy cannabis in the legal U.S. market this year.
Also, more people than ever support the legalization of marijuana.
From 2000 to 2019, the number of U.S. adults who think cannabis should be legalized in some form doubled, according to the Pew Research Center.
According to another Pew Research Center survey released in April, 91 percent of American adults think cannabis use should be legal in some form – 60 percent of adults surveyed think cannabis should be legal for both medical and recreational use, while 31 percent think it should be legal for medical use only.
While total illegal cannabis sales in the United States are more than twice the size of legal sales this year, the BDSA predicts that legal sales will exceed illegal sales by 2026.
The company also expects legalization at the federal level by 2022, but doesn’t expect that to happen until the state level, as cannabis use is still illegal in some states.
Reaching significant status was, I think, a very important historical moment for the industry, Fleshman said. It is a legitimate industry, even though it is still illegal at the federal level.
Further reading: Gun rights advocates and medical marijuana join forces, The Crime Report, June 18, 2021.