Cannabis Sales Peaked Again in Late March, But Then Declined

Following the record high cannabis sales seen in mid-March, many analysts presumed that revenues would drop off as consumers finished their coronavirus-related stockpiling.

Initially, this idea was challenged, as sales across the US and Canada peaked again around March 20. But recent data show that, by the end of March, marijuana sales were falling in key recreational states. 

This drop-off wasn't as sheer in California, the largest recreational cannabis market in the world, but many experts remain concerned over the industry's economic outlook. 

Another high, another low

According to the cannabis market research firm BDS Analytics, Canada and the US continued to display similar cannabis sale trends in late March, even as the impacts of the coronavirus became more drastic.

In Canada, the highest sales peak in March fell between Friday 13th and Saturday 14th, which matches the timeline of the reported stockpiling. But rather than dipping significantly after that period, sales reached two more slightly smaller peaks on Tuesday 17th and Friday 20th. Overall, according to BDS, Canada’s sales in this period of March were significantly stronger than previous weeks.

Similar results were seen in the US. Initial spikes in demand occurred between Friday 13th and Monday 16th, but another spike – higher than any recorded in January or February this year – was also recorded on Friday 20th.

In California, many of these later orders were fulfilled through deliveries and pick-ups, as shelter-in-place orders prevented consumers from visiting dispensaries.

“As we move out of 3/13, delivery and pick up really take off,” said Jessica Lukas, a senior vice president at BDS Analytics, during the company’s recent webinar last Friday, March 27.

From these initial figures, it might have seemed like recreational cannabis sales would rise above any coronavirus-related retail disruptions. But it appears, as March came to end, so did the period of cannabis stockpiling, at least for the states of Colorado and Washington.

According to data provided by Headset, another cannabis intelligence company, recreational cannabis sales from March 25-to-29 were less than those for the same days last year in Colorado and Washington, as reported by Marijuana Business Daily. In Colorado, the worst affected of the two states, sales were down 46 percent from the previous year on March 29.

This consumer drought has been partly blamed on the mountain state’s falling levels of tourism. But beyond Colorado, many analysts are concerned that the downward trend could extend to the whole cannabis industry and plunge it further into economic uncertainty.

“As for the cannabis industry itself, it was already experiencing an extremely tumultuous period before Covid hit,” Akwasi Owusu-Bempah, an assistant professor of criminology at the University of Toronto, told Analytical Cannabis last month.

“I have no doubt that the damage done to the broader economy by the Covid crisis will have a dramatic impact on the nascent cannabis industry. We will no doubt see a number of bankruptcies in the coming months and perhaps some mergers. It will certainly be a tough time for many – not only the growers and distributors, but also for the ancillary businesses.”

The Californian exception

But for those looking for more economic hope, California may be the place to start. Unlike Colorado and Washington, the west-coast state wasn't marked with a significant decrease in recreational cannabis sales in late March. Headset reports that even at its lowest point at the end of the month the state was still recording sales 9 percent higher than on that day the previous year.

Speaking to Analytical Cannabis, Elliot Lewis, CEO of Connected Cannabis Co., detailed how several of the company’s dispensaries across southern California were continuing to perform above expectations.

“Prior to the Covid-19 crisis, Connected’s dispensaries had already been experiencing long-term sales growth as a result of improving dispensary operations and customers shifting away from the illicit market, which is still robust in southern California.”

“Although the initial sales spike from the Covid-19 restrictions/concerns has seemingly passed, our sales are continuing the trend of steady increase from levels pre-Covid-19,” he added.

Concurring with this Californian cannabis exceptionalism, Brent Walker, owner for Tradecraft Farms dispensary in Vista, California, told Analytical Cannabis that the store’s sales had also remained level after an initial mid-March boom.

“We are lucky enough to enjoy a relatively large and dedicated patient base in North County San Diego,” he said. “Our patients also know we always have good quality meds, so the rush has kind of stuck.”

Ultimately, as an unprecedented pandemic spans the globe, it’s difficult to make any economic prediction for the cannabis markets over the coming months. Some analysts have speculated that, like alcohol, cannabis could be a vice that consumers still seek out during difficult financial periods. But others have warned that this thinking doesn’t take into account the social distancing measures many authorities around the world have put in place.

“I think there is optimism that cannabis may be counter-cyclical in the way that alcohol is sometimes,” BDS Analytics’ CEO, Roy Bingham, told Analytical Cannabis.

“I would just say there are two factors of work there,” he continued. “There is the tendency for people to move in that in that direction, but there is also the impact of recession and the ability to get out and about. And so I don't think one can draw any conclusion and say, ‘yes, it's counter cyclical in this situation.’ I think we will have a better sense of that in a couple more weeks.”