How Covid Impacted the Cannabis Industry by Numbers & How It Will Survive Inflation
https://www.cannabisbusinesstimes.com/article/covid-19-cannabis-purchase-change/
We can all agree that COVID-19 has been a real motherfucker for many businesses around the world. Many generational restaurants have been shut down, musicians embodied the “starving artist ethos” and even Hollywood delayed their projects.
While many industries have suffered due to the pandemic – the cannabis industry has not only survived…it THRIVED!
Now, with over a year of pandemic living – we have the data to see exactly what happened within the cannabis marketplace. Which products sold better, and what consumers preferred.
In this article, we’re going to be breaking down exactly how the cannabis industry fared under the policies of COVID-19.
The information to quantify this was from the Leaflink marketplace – which has presence in 27 cannabis markets across the US.
How much did the cannabis industry grow on average?
By “growth” we’re not referring to plants. We’re talking about wholesale cannabis prices and from March 2020 to March 2021 – there has been a 99% increase YoY (year-over-year).
For brands, they saw an average increase in sales of about 37% and the average purchase per retailer grew 42% YoY.
In essence, retailers have increased their stock due to the increase in demand of cannabis during the pandemic. There could be many reasons for this – which we’ll jump into at a later stage – but before we do let’s take a look at specific products.
This will give an insight to retailers to see where the preferences of the consumers lie which could help them make smarter purchases in the future.
The Popularity of Prerolls
It seems that Prerolls is a good investment! Since March, Prerolls have increased by 1.7 pp (percentage point) compared to the previous year.
In places like California – this specific category saw a 140% increase in sales, however in places like Arizona – it remained relatively unchanged.
However, looking at the national averages – we can see that Prerolls have gained in popularity and within a post-pandemic marketplace, could very well be the entry point for new consumers.
Why? Because Prerolls are effortless. You simply buy and can smoke right away which makes the process far simpler than having to grind up and roll it yourself.
Of course, there would be some purest who would argue that rolling your own joint is a rite of passage but that’s just cultural dogma if you ask me. I think cannabis should be fluid in that anyone who consumes should be able to set their own standards.
It seems that the new consumers – would prefer something like a preroll to get their proverbial “feet wet”.
Edibles
As for edibles, we saw a slight dip in market share. It dropped roughly 1.7 pp YoY with the most notable dip in Colorado that saw it go from 30% in 2020 to 26% in 2021.
However, analysts believe that this could very well be due to the Covid Restrictions in tourism which accounted for that portion of sales. If the restrictions are lifted – this could be reversed.
But then again, this could also simply be consumer trends.
What about Buds?
As expected, “flower” is still the strongest product with the most marketshare. In places like Michigan, flower sales soared with a 528% increase, which helped push the national market share from 30% to 35%.
In areas like Arizona, which had supply chain issues – there was a slight dip. This could be rectified once the pandemic restrictions are lifted.
Cartridges, which is considered “high-end” within the cannabis marketplace saw a dip due to the accessibility of flower. In a post pandemic world – if the flower price per gram remains cost effective, we could see this trend remain.
Why did people buy more weed during the pandemic?
There’s a couple of reasons why cannabis sales soared during the Pandemic. For starters, people were confined to their homes. Virtually all of their other “entertainment avenues” were shut down. You simply had television, games, social media and other “home stuff” you could do.
Cannabis then becomes an obvious choice for enhancing the entertainment value of what you had available to you.
However, cannabis was also used to help reduce pandemic anxieties, which has been on an all time high. Unlike alcohol, cannabis has a more significant impact at reducing anxiety and has less of an impact on the individual’s health.
People turned to weed to relax, to unwind and to push the global shitfuckery of “masks vs no mask, vaccine vs no vaccine narratives” out of their minds.
But let’s not forget that the government also gave people checks which then – in some cases – were used to buy weed.
Of course, this is not the case for everyone, but there was certainly a portion of consumers who spent some of the government money on weed.
What does this mean for the cannabis industry?
What comes next is tricky. In all likeliness, the US will experience some hyperinflation due to the rising cost of materials like steel, wood, and so forth. Not to mention that the US has already increased their debt by the beat of $10 Trillion Dollars.
It’s so easy to print money!
The problem is that the more money you print, the more you devalue the dollar. Another problem is that when people have money in their pockets, they don’t mind spending.
Retailers then begin to raise the prices due to the higher demand and consumers continue to buy. This slowly pushes the price per good upward, like wood that saw insane increase in value. Prices rose by 250% since last year according to Business Insider.
Right now, people aren’t feeling the effects of this yet – but give it a year or two and you’ll see many people foreclose on their homes.
For the cannabis industry however, since this is one of the crops that the US actually do produce – we can expect the industry to continue growing.
For those worried about inflation, if you want to make money during the next few years, invest in farmland, cannabis companies, and anything that produces physical goods and you should be fine.
It seems that the Pandemic hasn’t been all bad – especially for cannabis!
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