The Coronavirus Pandemic Continues to Wreak Havoc on the Economy, With Many Now Forced to Shelter at Home
With the Rise of COVID-19, Demand for Cannabis Delivery Services Has Increased as More Turn to Pot to Cope
It’s not just hand sanitizer and toilet paper that makes people feel safe and comfortable knowing they’ll be stuck inside for a fortnight. If a friend with weed is a friend indeed, cannabis companies that deliver to homes stand to do good business with folks who are fighting stress and passing the time with recreational cannabis. That’s especially true following the recent shutdown of bars and restaurants, which could last weeks or even months.
COVID-19 is giving a kick to marijuana businesses that can accommodate the growing desire and mandate to stay out of public places. This echoes the delivery uptrend seen in Europe during the 2008 ‘Great Recession’ when attitudes and laws had relaxed before the North American cannabis legalization upswing. In the United States and Canada, liberalization of pot restrictions started with medicinal access and expanded to recreational use in many jurisdictions, albeit not at the U.S. federal level.
There are also tiers of access where consumers have fewer hoops to jump through, starting with the strictest being prescription-only weed and working down to the on-demand delivery level. That is where many quarantined cannabis consumers find themselves now. Changes to the legal status of cannabis since the great recession means the Coronavirus fortnight of at least two weeks of sharply declined public activity in America could mean higher demand and greater opportunity for multi-state operators (MSOs) that can meet it.
Green Entrepreneur is reporting that multiple companies were already relaying early-March reports of increasing sales ahead of the nationwide explosion in the new work from home and Netflix and chill economy. Alcohol sales have also increased, but supplies of booze are much more robust than weed at any given time nationally. The same goes for cigarettes. With other vices like nicotine and alcohol, there are shelves available for any 21-year-old or above to browse without passing security guards or needing to have cash (remember that weed is a cash-only business in the U.S. thanks to federal banking restrictions.) So, while someone may hit the liquor store for multiple bottles, others are opting for cannabis delivery. In addition to stocking up on the standard essential products, marijuana has become a crucial part of many quarantine home-order lists as more turn to pot to help cope with the new reality.
The Motley Fool points to the smaller, privately-held California delivery service Ganja Goddess as having a 10% week-over-week increase in its delivery sales. San Francisco’s Sava saw a rise in value per order both in terms of dollar and weight during the first half of March, ahead of the quarantine announced by the city on March 16. Sava delivers throughout northern California, so it remains to be seen if the San Francisco shutdown puts a halt to its business.
So, what are cannabis consumers going for when they order in quantity? Keep in mind that the cannabis market is diversified and specified by product line. In Southern California, retail and delivery operator Sweet Flower points to sleep and wellness products rocketing in sales because of the collateral benefits of rest and overall health in supporting the immune system against contagious disease. Cannabis is used by many for its calming effects, even amid panic buying, helping to balance the mind and the household shopping list.
One Large MSO That’s Cleanly Delivering
It isn’t just mom-and-pop shops that are getting cannabis to consumers’ homes. Red White & Bloom (RWB), is an example of a large cannabis MSO that offers marijuana delivery services. RWB has ten stores in Michigan where adult-use cannabis is legal, many of which are set up to offer the option of home delivery. RWB has its own supply of cannabis, allowing it to control quality with a high standard of sanitation. In this era of hyper-vigilance about cleanliness, a clean supply chain is imperative. Retailers and delivery services have continued educational efforts about clean vaping, the importance of pure raw materials and processing operations as well as clean handling of packaging before the product gets to the end consumer. RWB expects to be publically traded soon on the Canadian Securities Exchange (CSE) through its merger agreement with Tidal Royalty (CSE: RLTY.U) (OTC: TDRYF). Sign up for the TCI Email Newsletter for updates on RWB’s impending IPO.
Eaze is another large player in the cannabis delivery service space with operations in Oregon and California. Elizabeth Ashford, a spokesperson for Eaze, recently reported that the company is experiencing a spike in business, likely a result of the Coronavirus pandemic. In addition to the rise in demand for pot delivery, retail cannabis stores across the U.S. have also seen a sharp increase in sales. According to Leafly, the New England Treatment Access in Brookline, Massachusetts was so busy recently that eager customers waited in long longs outside for the opportunity to stock up on cannabis.
With the markets afflicted by uncertainty, one thing is for sure–whether dealing with GrubHub, Zoom, or a leading cannabis firm like Red White & Bloom, individuals with no previous experience using delivery apps or having cannabis delivered to their home, could find themselves hooked on this convenient service, even when the economy returns to health.
Disclosure: The Cannabis Investor holds a position in Red White & Bloom.