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How Will Coronavirus Affect the Cannabis Industry?

Mar 11, 2020

How Will Coronavirus Affect the Cannabis Industry?

The rapid, global spread of the coronavirus disease (COVID-19) is set to cause widespread disruption to businesses, education systems, and public events around the world – and early reports indicate that the legal cannabis industry will be no exception.

Coronavirus and cannabis events

As of the latest World Health Organization (WHO) situation report, dated March 10, 2020, there have been 113,702 confirmed cases of COVID-19 globally, and 4,012 reported deaths.

One of the most visible effects of the disease on the cannabis sector so far has been the cancellation of several high-profile cannabis events and conferences.

Most notably, the South by South West (SXSW) tech, music, and film festival held annually in Austin, Texas, has been cancelled under the direction of the City of Austin, citing concerns over coronavirus spread. SXSW 2020 was scheduled to host a ‘cannabusiness’ track, which would have featured several panels on the technological, cultural, legal, and financial realities of the cannabis industry in America today.

In Israel, the organizers of the annual CannaTech Tel Aviv conference, which brought together over 1,200 participants from 40 different countries in 2019, have decided to postpone the event until June. Also delayed until June is the PsyTech Summit, created by the organizers of CannaTech. PsyTech is Israel’s first conference focusing on the use and development of psychedelics as medicine.

“Our number one concern is the health and safety of our attendees and speakers, our partners, our colleagues and our vendors,” said CannaTech founder and iCAN Israel-Cannabis CEO Saul Kaye, in a statement. “While we are disappointed to postpone both CannaTech Tel Aviv and PsyTech Summit, we are very confident it will be worth the wait.”

In Germany, the Berlin edition of the International Cannabis Business Conference (ICBC) has been rescheduled over health and safety concerns associated with coronavirus, moving from early April to late July. And in the UK, the Centre for Medicinal Cannabis’ inaugural conference, due to take place in April, has been postponed.

Coronavirus and the cannabis market

On Monday, March 9, global stock markets experienced their steepest falls since the 2008 financial crisis. In the US, the S&P 500 fell 7 percent from its closing value the day before, which triggered a circuit breaker that halted all trading for 15 minutes on Monday morning. As of Tuesday night, the markets remain turbulent, though small rises in Britain’s FTSE on Tuesday morning and a positive Wall Street jump is prompting some optimism.

This market volatility, which is in large part due to the coronavirus outbreak, will have a knock-on effect the entire economy and is likely to affect all major markets. But there are more specific factors that tie COVID-19 to disruption in the cannabis market.

The majority of COVID-19 cases reported so far have been in China, where employers are beginning to pause factory operations and temporarily close businesses in an attempt to contain the spread of the disease. Factory activity fell to a record low in February, reports New Frontier Data, and it’s uncertain when full production might resume.

This is particularly concerning for the cannabis industry, as China produces the vast majority of the hardware for cannabis vape products. Some cannabis vape product suppliers are already reporting hardware shortages, which is likely to impact sales figures. Such complications caused by coronavirus protection measures follow close on the heels of concerns surrounding vaping-related lung injury, which have also impacted the cannabis vape industry over recent months.

For other cannabis product types, it’s more uncertain what impact COVID-19 might have. On the positive side, some dispensaries in the US have reported a bump in cannabis sales as medical cannabis patients stock up on products; the Centers for Disease Control and Prevention (CDC) have advised patients to have at least one month’s supply of medication on hand in case supplies become strained in the future.

But despite this bump, dispensary owners remain cautious. Many are putting together plans for how they’ll respond to potential future disease containment measures, such as social distancing that drives people to avoid public areas like stores.

“Traffic is normal right now. We’ll do a flash sale if it looks like things are going to close,” California dispensary owner Debby Goldsberry told Leafly. Goldsberry has put together an 18-page COVID-19 plan for her dispensary in Oakland, which detail the actions they’ll take if the store has to close or traffic slows dramatically due to COVID-19.

Coronavirus and policy

One of the less obvious ways that COVID-19 may affect the cannabis industry is through its effects on the political process.

In New York, cannabis legalization is uncertain to have the support to pass as a standalone bill. Disagreement over social equity provisions caused large delays for a legalization bill put forth in the last legislative session, and, at the eleventh hour, politicians instead focused their efforts on passing a less controversial decriminalization proposal.

Governor Andrew Cuomo still views cannabis legalization as a priority for the state and is now hoping to legalize the drug through the state’s budget process next month. As part of this, the governor had planned to embark on a fact-finding mission to other states with legal cannabis industries up and running. But with concerns over COVID-19 reaching fever-pitch in the United States, it’s unclear whether this planned trip will go ahead.

During a press conference, Cuomo didn’t say whether he still intends to travel on this learning trip, and instead chose to reemphasize that containing COVID-19 remains his administration’s top priority at the moment.

“I hope that we can get that done on time, but this is a priority,” Cuomo said. “There’s no doubt about that. And only I can do this.”

It’s uncertain what a delay to this fact-finding trip might mean for the legalization proposal’s inclusion in the state budget. The state’s next fiscal year will begin on April 1. Any final budget talks and discussions will need to conclude in the days before.

The latest on the coronavirus

At a media briefing on March 9, the WHO director-general stressed the importance of early action and taking appropriate protective measures.

“As you know, over the weekend we crossed 100,000 reported cases of COVID-19 in 100 countries. It’s certainly troubling that so many people and countries have been affected, so quickly,” Dr Tedros Adhanom Ghebreyesus told the media.

“Now that the virus has a foothold in so many countries, the threat of a pandemic has become very real. But it would be the first pandemic in history that could be controlled. The bottom line is: we are not at the mercy of this virus.”

(Image credit: World Health Organization, via https://www.who.int/emergencies/diseases/novel-coronavirus-2019/advice-for-public)


“The great advantage we have is that the decisions we all make – as governments, businesses, communities, families and individuals – can influence the trajectory of this epidemic,” Ghebreyesus continued. "We need to remember that with decisive, early action we can slow down the virus and prevent infections.”

More information on COVID-19, including answers to frequently asked questions and guidance on appropriate protective measures, can be found via the WHO website. Additional guidance and local information can also be sought through the relevant national public health authority, or healthcare provider.


Alexander Beadle

Science Writer

@alexbeadlesci

Alexander Beadle has been working as a freelance science writer since 2017 and has covered the cannabis industry for Analytical Cannabis since 2018. He has also written for our sister publication, Technology Networks, and the cannabis industry consultant firm Prohibition Partners, among others. Alexander holds an MChem in materials chemistry from the University of St Andrews, where he won a Chemistry Purdie Scholarship and conducted research into zeolite crystal growth mechanisms and the action of single-molecule transistors.

 

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