Consumer Products

Marijuana Purchases and Use Soar as Coronavirus Spreads Across the US

From the “Captain Obvious” department: Statistics show that marijuana sales have spiked over the past few weeks, and it appears that, unlike toilet paper and hand sanitizer, the sales increases are not just the result of users hoarding while expecting weeks or even months of isolation. Investors who once embraced the marijuana industry just a couple of years ago have all but abandoned it, despite statistics that show growing overall use.

In an interesting and very solid report from Alliance Global Partners, analyst Aaron Grey makes the case that while the industry has been very volatile, the numbers are trending higher. This was noted in the report:

The coronavirus (aka COVID-19) continues to impact the US and world, disrupting everyday life. Within this disruption, cannabis sales spiked the past few weeks according to multiple data providers & companies. We believe this points to the resiliency of cannabis and goes deeper than just consumers hoarding product in anticipation of a prolonged period of isolation. We see this as pointing to the staying power and importance of the industry as many states have deemed cannabis business “essential” despite thousands of federal legal businesses being shut down. That said, we still see high risk to specific companies during this period, particularly those who may need to tap the capital markets in the near-term.

The mere fact that some states and localities have deemed that marijuana dispensaries are among the companies in the “essential business” category, which allows them to remain in operation during some lock-downs, is indeed a sign of growing acceptance. The Alliance Global team feels that this eventually could help with the federal legalization efforts.

Not exactly sure of the status of cannabis? Marijuana is currently legal for recreational use in Alaska, California, Colorado, Massachusetts, Maine, Michigan, Nevada, Oregon, Vermont, Washington and the District of Columbia. On January, 1, 2020, Illinois became the 11th state to legalize recreational marijuana.

In addition, at the end of 2019, a poll done by CBS indicated that support for legal pot hit a new high in 2019, with two-thirds of adults polled saying marijuana should be legal. In addition, for the first time in CBS News polling history, a majority of Republicans (56%) favored legal marijuana. While people ages 65 and over continued to be the least likely age group to support marijuana legalization, slightly more of them favored it (49%) than opposed it (45%) in that poll.

It should be noted that while states have made the recreational use of pot legal, it is still illegal on a federal basis. Therefore it remains a cash-driven business as dispensaries around the United States only take cash or debit cards. The Alliance Global report notes that making pot an essential business at the state level shows the disconnect between state and federal law and could help drive a reassessment of legality, or at the minimum, permissibly at the federal level in the coming months and years.

In states like California, some dispensaries actually take orders from customers off of an online menu, and the products, whether of the leaf, vape or edible variety, are actually ordered and delivered like pizza is. The report noted this when discussing the increase in deliveries:

Google Trends data shows that searches for “Cannabis Deliveries” has more than doubled from levels in January. While we do not believe these levels will hold over time, we do believe this could help to accelerate the growth of cannabis delivery, which has already been increasing over the past five-years per Google Trends. That said, delays caused from high demand could increase the wait times beyond the norm (as many sites have indicated). This likely makes the consumer experience not as optimal as it would be during a normal course of business – which could impact repeat delivery purchases when we do get back to a sense of normalcy, in our opinion.

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