COVID-19 CANNABIS

The impacts of the pandemic are being felt in all corners of industry and business from international corporations, local businesses, education systems, hospitality, travel, tourism, major public events and the cannabis industry, which is no exception. So how will/has this unprecedented, international public health crisis changed the face of the legal cannabis industry, for worse and in some cases for the better! The majority of cannabis consumer have either maintained or increased their usage during lockdown. Consumer research conducted on Adult cannabis consumers aged between 16 and 65 in the US, Canada and the UK showed that medical users were most likely to maintain their current levels of consumption, whereas recreational users were more likely to increase consumption as they attempt to make lockdown less boring or stressful. This increase in demand has resulted in record breaking sales in the legal settings as well as reported price increases on the black market across both North America and Europe. Reports from Spain and France indicated that the price of cannabis and hash hashish rose to double or triple its usual price due to the sheer demand. Governments in regions like Quebec, and the Netherlands have opted to keep cannabis stores open during lockdown in a move to not only maintain supply medicinal prescriptions but also in the case of the Netherlands at least, to avoid similar increases of black market activity and price. Legal cannabis dispensaries in the US, Canada have experienced a boom in sales after being classed as “essential” businesses and being allowed to remain open. This in itself has been seen as a significant moment of progress and recognition by the cannabis industry. The fact that cannabis dispensaries have been classified as “essential” alongside the likes of generic pharmacies and food stores shows just how far the mainstream view of cannabis has changed for the better. No doubt that this new elevated status will help to bolster the calls and campaigns for more widespread legality. Legal states including California, Colorado, Illinois, Maryland, Michigan, New Jersey, New Mexico, New York, Ohio, Oregon, Washington Chicago, Denver, and San Francisco have all experienced an upturn in sales. To give you some scale of the rise in demand, sales in Denver on March 23rd, were up 392% over the same weekday prior to the “stay-home order.” It has not been good news for everyone however as whilst some states have seen increases in sales, other states where cannabis sales are closely linked with tourism have suffered. Markets such as Las Vegas have been hit particularly hard. Where businesses have remained functional however many have adapted to meet demand by offering services such as takeaway and delivery and accommodating telemedicine applications to minimise in-person interactions. Even cannabis giant “Leafly” have got in on the act and  launched a cannabis delivery service for Arizona, Florida, Maryland, Michigan, Nevada, New York, and Oregon. Although revenue may be being lost due to factors such as disrupted supply chains, shop closures, restricted movement and economic slowdown. “Lockdown” can also be considered a time of innovation for cannabis companies, with the forming of new operational systems that could improve the way things are done in the future.  Delivery services are a perfect example of this. Although at the moment dispensaries must undertake their own delivery services we may go on to see this business model becoming “the norm” in the way food delivery services such as Deliveroo now exist.  This would suit life outside of lockdown and benefit those with limited mobility or that live in more isolated area with little or no access to transport. The supply chain is another area, which is proving to be a challenge to keep moving during these uncertain times. Medical resources, including healthcare professionals’ time and attention are in short supply and are being concentrated on fighting the virus. Regions that are dependent on imports are also facing challenges as border restrictions tighten and staff involved in logistics become unavailable. Regulators have had to adapt to ensure supply lines are open and distributors can meet demand. In Pennsylvania for example patients can now obtain online prescriptions that are valid for 90 days rather than 30. In the UK too, a UK-based medical cannabis group has agreed emergency measures with the Home Office to import sublingual cannabis medications for the first time. COVID-19 is no doubt leading to supply bottlenecks, caused by the complicated processes involved in obtaining prescriptions, pharmacies dispensing cannabis, and distributors supplying cannabis. In Spain, around 200,000 patients who normally would obtain medication from semi-legal cannabis clubs, are now unable to access any supplies. This public health crisis has exposed without doubt that the current system of medical cannabis supply in most regions is overcomplicated, inadequate and vulnerable to shocks such as the current pandemic and needs to be replaced by comprehensive medicinal access schemes to ensure patient demand is met. COVID-19 has brought the worlds Economy to its knees and Analysts from the IMF and the UN are predicting a global recession is pretty much unavoidable. So with such uncertainty, what can we expect the future of the cannabis industry to look like? To answer this it is useful to look at the 2008 financial crisis, which not only changed the global economic landscape but also saw consumer behaviour change beyond all recognition.  There was a shift away from professional services as consumers adopted a ‘do-it-yourself’ attitude, ditching gym memberships and visits to hair salons, in favour of home hair dyes and home workout equipment. Similarly, consumers moved away from purchasing products at premium brand stores, and moved towards more discount retailers. This could be replicated within the cannabis industry as consumers move away from the luxury cannabis brands towards cheaper alternatives, especially as bulk buying remains popular due to on-going social distancing measures and self-isolation. A steep recession following the COVID 19 crisis means an international slowdown of economic activity and widespread loss of jobs. The response to this by the governments in the US, Australia and the UK has been to release massive economic care packages to the wider population, which is great, but which will more than likely come back to bite us in the future in the form of increased taxation. The possible legalisation of cannabis now presents, more than ever, an opportunity for these governments to claw back some of the expenditure that COVID 19 has forced upon them without having to make unpopular increases on compulsory taxes such as income tax and council tax. The proof is there to be seen through the countries and states that are already benefitting from collection of tax on the legal cannabis market. For example Colorado and Washington reported US$303 million and US$400 million, respectively, in cannabis-related sales taxes in 2019.  Considering these figures and given the estimate that a ‘legal' cannabis industry could be worth as much as £3 billion to the UK by 2024, it seems that tax benefits could make legalisation a very attractive option for ‘fast tracking’ for many governments in the developed world.  This would be a totally achievable move considering that we have already witnessed governments, healthcare systems and global commerce fundamentally change the way they operate and adapt quickly in the face of COVID-19. The legal Pioneering regions like Canada and US states have already established the foundations of a responsible system of cannabis control and know what does and doesn’t work in terms of licensing systems, compliance, standardisation and retail logistics. All of which could be used as a blueprint and applied at speed in other regions.  COVID-19 has also once again opened upon the argument surrounding cannabis criminalisation due to the high level of COVID-19 deaths in jails across the world where prisoners convicted on cannabis related charges, who may have underlying health conditions are in reality now facing a potential ‘death sentence’ as a result of the spread of the virus in the jail system. Cannabis prohibition criminalises millions of ordinary people. For example, in the US, more than 609,000 people were arrested simply for ’possession’ in 2018, whilst in the EU, more than 840,000 possession offences were recorded in 2017. The case to expunge these convictions is strengthened by the contradiction that Cannabis dispensaries have been widely authorised by governments as “essential services” that must remain open during the pandemic, however those same governments are keeping people locked up for cannabis related “criminal” activities which could end up costing them their lives! Beyond the element of human injustice, is the financial one! $7.7 billion taxpayer dollars are wasted each year in the enforcement of outdated drug laws in the US alone. In the context of economic slowdown and huge government spending in the wake of COVID-19, decreasing this burden on the justice system would free up more funds to pay back the pot that has had to bail whole countries out of financial destitution. Although hopefully we are now seeing the peak of this terrible virus, the after effects will be felt for a long time to come and the world that we were used to and the way in which we led our lives will have changed considerably. In some ways for worse but hopefully in some ways for the better!