For many cannabis industry executives, it’s been a white-knuckle ride since the World Health Organization declared the COVID-19 outbreak a global pandemic in March 2020.
After climbing to record levels that year, marijuana sales have since slowed from a gallop to a “more normal” pace.
At the same time, business strategies that took hold during the pandemic – online ordering, delivery, curbside pickup, drive-thrus – have stuck around but aren’t used quite as widely now that many pandemic restrictions have been lifted.
“We all recovered fairly well into the second half of 2020,” said Scot Lee, chief of operations at Theory Wellness, a cannabis company based in Stoneham, Massachusetts.
“The onset of 2021 was met with stimulus checks and many different programs to help support people, and this continued to help ensure that business stayed steady.”
Marijuana industry faces upheaval
After the World Health Organization declared a global pandemic on March 11, 2020, much of the U.S. began lockdown restrictions – a move that dramatically altered the cannabis business landscape.
Massachusetts temporarily closed its adult-use cannabis retailers, for example. States such as Nevada allowed only curbside pickups and delivery.
In Denver, the mayor announced that recreational marijuana retail stores in the city must close to stop the spread of the coronavirus, then reversed course hours later after people lined up for blocks to stock up on cannabis.
By contrast, legal marijuana markets in 32 states and Washington DC were allowed to stay open during state-mandated stay-at-home orders, according to the Marijuana Policy Project.
Then came the stimulus and employment checks, as the U.S. government sought to keep money circulating throughout the economy to counter layoffs and untold numbers of shuttered businesses.
With movie theaters, restaurants and other forms of entertainment closed, many people sought out cannabis in a big way.
The learning curve for entering the cannabis industry is steep. Start with the fundamentals.
MJBiz Cannabis 101 Email Course
A 10-part email course designed to educate new hires and aspiring professionals on the key fundamental areas of the legal cannabis industry, including:
- History of legal cannabis in America
- Overview of plant-touching + ancillary business sectors
- Cannabis finance and investing
- Cannabis marketing and brand building
- Employment + hiring opportunities
- And much more!
Gain a comprehensive understanding of this complex industry with this free resource.
Early during the pandemic and the subsequent lockdowns, cannabis sales skyrocketed across the six U.S. adult-use markets tracked by Seattle-based data-analytics firm Headset.
By the week of March 16, 2020, cannabis sales in California, Colorado, Michigan, Nevada, Oregon and Washington state were already 38% higher than during the first full week of January that year.
After a brief dip in late March, when many states were in full lockdown, purchases continued to climb through the summer, peaking during the week of Aug. 31, 2020, at 59% greater sales than the first week of January.
Sales declined slightly toward the end of 2020 before surging again in the spring of 2021, around the marijuana industry’s unofficial April holiday, 4/20.
Since then, U.S. cannabis sales in those markets have been gradually slowing, possibly returning closer to a pre-pandemic normal, according to Headset.
“We have all started seeing more challenges in the second half of 2021 and on the entry into 2022,” noted Theory Wellness’ Lee. “We’re definitely seeing some implications where consumers do not have as much free money to spend.”
At the beginning of the pandemic, many businesses either chose – or were forced – to sell products online with curbside pickup.
Some states allowed retailers to operate drive-thru windows.
Many of those practices took hold and remain in use today, even as many pandemic restrictions are lifted.
At Arizona-based Copperstate Farms’ retail arm, Sol Flower, Senior Director of Marketing Allie Marconi said she’s seen a big shift in consumer behavior.
At the height of the pandemic, 90% of the company’s sales were online and 10% in person.
That’s now the reverse, which Marconi likes because customers can speak more with sales associates.
The pandemic forced the company to beef up its e-commerce capabilities beyond typical email and text-message marketing.
For example, one new functionality: If a shopper places items in an online cart but does not make a purchase, the system sends an email reminder about the abandoned cart.
“I wish I had the capabilities in 2020 that I have today,” Marconi said.
Curbside pickup has slowed significantly in recent months, but the company is trying to add a drive-thru window to a retail location, reflecting a pandemic-related change to regulations.
Marconi’s team also learned the importance of responsiveness within the company when the pandemic began, and that’s something she hopes will continue.
“Being quick to communicate and communicate often – to our team and shoppers – that was something that was pivotal,” she added.
Coping with challenges
Much like the data shows, Jeremy Goldstein, chief operating officer and co-founder of infused-products company Ripple, based in Colorado, has seen his business grow steadily through the pandemic.
That’s even though the company has had a tougher time launching new products the past two years because retailers weren’t allowing vendor pop-ups and in-store, in-person marketing.
To cope, his sales team became familiar with video calls, which was a poor substitute, Goldstein said.
“It was a hard time to get a message out, clearly, but not impossible,” he added.
Starting last month, Ripple redoubled its efforts to market products by attending in-person industry events.
For Doug Chloupek, CEO and founder of vertically integrated cannabis company Juva Life, based in the San Francisco Bay Area, the pandemic provided an opportunity for the company to increase revenue via its delivery service.
One feature consumers liked was contactless signatures for product drop-offs, which the company will continue. Customers can also still request that a delivery driver wear gloves and a mask.
“COVID caused a whirlwind of changes,” he added.
As people went back to work and inflation and gasoline prices rose, sales have been on a steady decline over the past five months for Brandon Wiegand, chief commercial officer for the Source+ in Las Vegas.
Despite that, the company has kept the curbside and delivery parts of its business and improved its e-commerce platform.
Wiegand said the team learned how to communicate better, and with more transparency, over the past two years.
“We’ve all learned how to be more flexible,” he said. “Now we know how tough things can really get.”
Bart Schaneman can be reached at firstname.lastname@example.org.