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Recent events have resulted in consumers stockpiling on cannabis. Presently, what is the estimated demand for cannabis?
The cannabis industry is showing itself to be recession proof, but it is important to understand that the significant spike in consumer demand is most likely only temporary. Cannabis stockpiling is parallel to the stockpiling of other commodities that have been recently flying off the shelf like food, alcohol, and everyone’s favorite, toilet paper. The CDC advised citizens to have a months worth of medication, so naturally people are flocking to the dispensaries to do just that. During times like these when people have much more free time on their hands, demand spikes for several reasons, including the fear that access will not be available much longer. When all the stay-at-home orders are removed and life goes back to normal, what is left over is oversupply and individual stockpiles of cannabis. What makes this dangerous for cannabis operators is the sudden spike in demand leads to a false sense of business expectations and just like there was a spike in demand, many of these companies will see a sharp drop in sales post- quarantine.
As a result of cannabis stockpiling, are businesses having to make any changes to their delivery network?
The entire cannabis supply chain is experiencing a reshuffle in response to the pandemic. Cannabis dispensaries have been deemed as essential businesses by many jurisdictions, allowing them to stay open. As a result of social distancing orders, dispensaries are adopting curbside pick-up, adding delivery to their services and allowing for pre-orders to expedite purchases and limit physical exposure. One state (Colorado) already issued its first approval for delivery.
Are coronavirus-related social distancing and hygiene guidelines creating staffing problems for cannabis businesses?
Not necessarily a problem, but an opportunity for adaptation. Cannabis retail locations have modified their day-to-day operations to keep all team members and customers safe. Retail workers have transitioned into delivery drivers and have also implemented curbside pick-up. As a matter of fact, there is presently a spike in staffing for the delivery and logistics sector of the industry.
What changes have manufacturers and cultivators had to make to keep up with increased demand?
Production has definitely been ramping up. With the abundance of raw flower in California, it is much easier for the manufacturers to increase production than it is for the cultivators. For the cultivation sector, any ramp up in production won’t be seen for at least several months simply because of how long it takes to grow the plant. Cultivators should realize that demand may not be as high in the next few months, which is about the time when their crops are ready for harvest.
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