There’s no surprise as to why the Coronavirus Pandemic has helped cannabis sales increase in the U.S., more specifically recreational cannabis sales. With little or nothing to do, people have been stuck at home. Much of the stimulus money sent out was most likely spent at dispensaries, as well. All the while, cannabis businesses have been reaping the rewards of increased demand.
However, this pandemic has done more for the cannabis industry than simply an increase in sales. What follows an increase in sales is an increase in prices, thus allowing a company’s profits to soar. As a consumer, a rise in prices can be disappointing, however its best to overlook the short-term setback to see the bigger picture, that possibly being cannabis legalization nationwide.
Why Sales Are UpThe covid pandemic has caused cannabis demand to increase drastically. Click To Tweet
Cannabis sales are up across the country (in legal states), however these four states had the biggest increase. In California and Colorado, recreational cannabis prices jumped 13% at the end of 2020. For Washington state, that increase was 19%. And the biggest gainer was Nevada, with a 25% increase in recreational marijuana prices. This demand is hitting record numbers.
There are a few reasons as to why the pandemic has caused these increases. First off, when most states imposed stay-at-home mandates, many people found themselves stuck at home with little or nothing to do. Whether they were relocated to perform remote work, or lost their job completely, more time spent at home got quickly boring for most. With little fun around the house, and marijuana working well to enhance creativity and make even the dullest events somewhat fun, people turned to the psychoactive plant possibly for a new source of entertainment.
Another source of increased demand was the generous stimulus checks that the federal government decided to hand out. Qualifying Americans were sent thousands, with many of them not even requiring the additional funds. Now they had play money, and we all know how American consumers act with discretionary spending. If they weren’t buying a new boat or filling their garages with nonsense, many Americans used a part of their stimulus checks to shop at their local cannabis dispensaries.
Speaking of staying home, this could have given many who previously looked down on cannabis a chance to do some online research. With the right sources, these people may have found the plant to be not so bad, and were willing to give it a try.
The last area where the pandemic helped cannabis sales is through state governments. Most of them, where cannabis is already legal, deemed the cannabis industry as an essential business. This allowed cannabis companies to thrive throughout the pandemic, and not worry about shutting down shop as with many other industries (barber shops, gyms, bars, etc.).
How The Pandemic Can Improve The IndustryBusinesses can use these increased profits to expand their operations. Click To Tweet
All of this influence helped many companies reach profits they had never seen before. Some of them, such as Next Green Wave, are using this increase to expand their operations and produce more cannabis products. However, observing if these profits can be upheld after the pandemic is over will be interesting.
In economics, an increase in demand inevitably results in an increase in prices. Unfortunately for consumers, this does mean paying more for your weed. Yet for cannabis companies, a rise in prices reflects growth in the industry. Higher prices and more sales means a company can use more capital to expand operations and reach more consumers.
In addition to increasing profits, the pandemic has also put a spotlight on the cannabis industry as a whole. It will be hard for the federal government to ignore the signs that cannabis is prospering. With this, hopefully they will consider nationwide legalization sometime soon.
Even before Covid, the cannabis industry was on the rise. Now with such a spotlight and many advocates calling for legalization, only time will tell what happens next. What will the future of the cannabis industry look like in the United States? Thanks for reading!