There’s no surprise as to why American consumers have been spending more during this Covid-19 Pandemic. The government has been handing out tax dollars (well, handing them back). With consumer spending behavior in mind, these stimulus checks have done well to fuel the economy. They have even helped many businesses pick up profits. What about cannabis businesses? Does more stimulus equal more cannabis sales?
Consumer Behavior
The short answer is yes. Economics tells us that consumers are more likely to spend recreationally when given discretionary money, which many Americans have used their stimulus checks. Because of this, many cannabis companies are already anticipating more sales with the recent release of another stimulus round. One of these companies, Golden Leaf Holdings, whose CEO stated that he hopes for another boost in sales as seen with the previous stimulus checks.
With America’s capitalist nature, consumer spending is one of the biggest driving forces in the economy. It’s simple: the more money consumers spend at businesses the better off those businesses will be. This is one of the largest reasons stimulus checks were sent out, not to mention help with bills for those out of work. These checks are helping many cannabis companies simply stay afloat and not go out of business.
Not Only Stimulus Helped
An obvious factor in sales is the direct payments to Americans from the federal government, in addition to the monthly unemployment checks sent out. But stimulus checks and the pandemic helped the cannabis industry in other ways, including:
- It gave Americans more disposable money to spend on recreational products, such as cannabis.
- As people lost their jobs, they now had nothing holding them back from trying cannabis for the first time. (Many employers still test for THC in their employees and can fire them for it).
- Covid-19 caused many people to retain increasingly high-stress levels. Know what one of the best stress relievers is? Cannabis!
- Without a job, people had more time to read Reefer Posts’ articles, and may have learned that cannabis is not as bad as certain stigma made it out to be.
Previous Stimulus Sales
After the first round of stimulus checks were sent out in April 2020, recreational cannabis sales had already seen a rise. In California, Colorado, Nevada, and Washington (combined), cannabis sales jumped from $500 million to $800 million before the second round of stimulus checks was released in December 2020.
These stimulus payments alone have allowed certain cannabis businesses to hit records in their sales, to numbers they had never seen before. Record sales in the cannabis industry hint at the industry possibly being recession-proof, and not affected when the economy sinks.
As cannabis businesses were deemed essential at the beginning of this pandemic, the industry has actually thrived when other industries may have fallen. For example, cannabis sales have easily surpassed alcohol sales during the pandemic. When the four states mentioned above passed $800 million in sales, alcohol sales across the entire nation reached around $6 million.
What will the cannabis industry look like after the Covid Pandemic has concluded? Will this thrive in business be able to stay afloat even as Americans turn to other sources of spending? What happens when travel and tourism pick back up, will cannabis sales remain the same? Many believe so, as tourist hotspots like Las Vegas have legalized cannabis and are helping drive those record sales. Thanks for reading!
FAQ: How More Stimulus Equals More Cannabis Sales
Answer: Stimulus money enables more people to buy cannabis products as the additional funds can fund a larger portion of their cannabis purchases. This increases the demand for cannabis products, spurring sales.
Answer: Increased customer demand can translate to increased sales and greater profits for cannabis businesses. This can also help cannabis businesses achieve greater financial security, allowing them to expand their operations.
Answer: Increased cannabis use can lead to health risks such as addiction, as well as increased rates of intoxication-related accidents. With additional spending on cannabis products, it is important to take health, safety, and legal considerations into account.
Answer: Cannabis businesses can implement strategies to stimulate continued demand for their products; this includes offering discounts, providing more variety in products, as well as implementing loyalty programs among existing customers. Additionally, these businesses can attract new customers by marketing their products to generate more sales in the long run.
All statistics were originally reported by the U.S. Census Bureau.
