The COVID Effect on Marijuana Sales. Can the rapid pace continue after the pandemic?
We all agree that COVID-19 has been a real motherfucker for many companies around the world. Many generational restaurants were closed, musicians embodied the “starving artist ethos” and even Hollywood delayed their projects.
While many industries have suffered from the pandemic, the cannabis industry not only survived … it is DRIVEN!
Now, after over a year of pandemic, we have the data to see exactly what happened in the cannabis market. Which products sold better and which ones did consumers prefer?
In this article, we’re going to break down exactly how the cannabis industry fared under the guidelines of COVID-19.
The information to quantify this comes from the Leaflink market, which has a presence in 27 cannabis markets across the United States.
How much has the cannabis industry grown on average?
By “growth” we don’t mean plants. We’re talking about wholesale cannabis prices, and from March 2020 to March 2021 – it’s up 99% year over year.
Brands saw average sales growth of around 37% and the average purchase per retailer increased 42% year over year.
Essentially, retailers increased their inventory levels due to the increased demand for cannabis during the pandemic. There can be many reasons for this – which we’ll get into later – but before we do that, let’s take a look at specific products.
This gives retailers some insight into where consumer preferences lie, which could help them make smarter purchases in the future.
The popularity of prerolls
It seems like prerolls are a good investment! Since March, the prerolls have increased by 1.7 percentage points compared to the previous year.
In countries like California – sales in this particular category grew 140%, but in countries like Arizona – it remained relatively unchanged.
However, a look at the national averages shows that prerolls have grown in popularity and could well be the entry point for new consumers in a post-pandemic market.
Why? Because prerolls are effortless. You just buy and you can smoke right away, which makes the process a lot easier than having to grind and roll it yourself.
Of course, there would be some purest who would argue that rolling your own joint is a rite of passage, but that’s just a cultural dogma if you ask me. I think cannabis should be liquid so that anyone who uses it should be able to set their own standards.
It seems that the new consumers – would prefer something like a preroll to get their proverbial “feet wet”.
There was a slight decrease in market share for food. It fell around 1.7 percentage points year over year, with the most notable drop in Colorado from 30% in 2020 to 26% in 2021.
However, analysts believe this could very well be due to the Covid restrictions on tourism that made up that portion of sales. If the restrictions are lifted it could be reversed.
On the other hand, this could also simply be consumer trends.
What about buds?
As expected, “Blume” is still the strongest product with the largest market share. In countries like Michigan, flower sales rose 528%, which helped increase the national market share from 30% to 35%.
There was a slight decrease in areas like Arizona that had supply chain issues. This could be fixed once the pandemic restrictions are lifted.
Cartridges, considered “high-end” in the cannabis market, have seen a decline due to the accessibility of flowers. In a post-pandemic world – if the price of flowers per gram remains affordable, this trend could continue.
Why did people buy more weeds during the pandemic?
There are several reasons cannabis sales soared during the pandemic. For starters, people were confined to their homes. Practically all other “entertainment streets” were closed. You just had television, games, social media, and other “homework” to do.
Cannabis then becomes an obvious choice for adding entertainment to what was available to you.
However, cannabis has also been used to reduce pandemic fears, which were at all-time highs. Unlike alcohol, cannabis has a greater impact on reducing anxiety and less on an individual’s health.
People turned to the weeds to relax, unwind, and get the global shit of “masks versus no mask, vaccine versus no vaccine narrative” from their minds.
But let’s not forget that the government also wrote checks which, in some cases, were used to buy weeds.
Of course, this is not the case for everyone, but there was certainly a segment of consumers who spent some of the government money on weeds.
What does this mean for the cannabis industry?
What’s next is difficult. Most likely, the US will experience some hyperinflation due to the rising cost of materials like steel, wood, etc. Not to mention the US has already increased its debt by $ 10 trillion.
It’s that easy to print money!
The problem is, the more money you print, the more you devalue the dollar. Another problem is that people with money in their pockets don’t mind spending money.
Retailers then start raising prices in response to higher demand and consumers keep buying. This slowly pushes the price per commodity upwards, as is the case with wood, where the value has risen insane. According to Business Insider, prices have increased 250% since last year.
Right now people are not feeling the effects – but give it a year or two and you will see a lot of people sealing off their homes.
For the cannabis industry, however, we can expect the industry to keep growing as this is one of the plants that the US actually produces.
If you want to make money in the next few years, invest in farmland, cannabis companies, and anything that produces physical goods and you should be fine.
It seems the pandemic wasn’t all bad – especially for cannabis!
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