Cannabis, China & the Coronavirus – Are Pot Stocks About to be Infected?

Can weed really kill the coronavirus? Will the vape supply chain be affected by Chinese import restrictions? Are cannabis cultivators and ancillary pot stocks about to suffer? Let's find out

The world has been in a panic ever since the new Chinese coronavirus disease—which is now officially known as COVID-19—began stoking fears of a global pandemic in early 2020.

Infections have now topped 65,000 globally, which has led to the introduction of travel bans, trade restrictions and quarantine measures. The death toll has also risen to at least 1,486, with the vast majority occurring in mainland China.

However, one curious side effect of the worldwide meltdown has been a sudden boom in internet searches asking, "can cannabis kill the coronavirus?". The massive spike in interest can be traced back to a meme that was posted on Twitter earlier this month by Filmmaker Vivek Ranjan Agnihotri.

cannabis kills coronavirus

Agnihotri began circulating a screen grab of a fake news bulletin which purportedly claimed that a team of scientists had discovered that marijuana is an effective treatment for coronavirus infections.

The fabricated image—which featured the headline "Breaking News – Weed Kills Coronavirus"—then began circulating widely on WhatsApp, before eventually doing the rounds on other social media platforms.  In his tweet Agnihotri claims that the "solution to a lot of the world's problems lies in India".

"But you can't find them as long as you ridicule our ancient wisdom. Cannabis is a magic plant. Till mid-80s it was sold by Govt."

"Because of Rajiv Gandhi and western Pharma companies it got bad name. Make cannabis legal," he said.

To date, there is no specific medicine recommended to prevent or treat the novel coronavirus. However, those infected with 2019-nCoV should receive appropriate care to relieve and treat symptoms, and those with severe illness should receive optimized supportive care. Some specific treatments are under investigation and will be tested through clinical trials. WHO is helping to coordinate efforts to develop medicines to treat nCoV with a range of partners.

Official statement from the World Health Organization

Unfortunately, his claims were quickly revealed to be a bald-faced lie, as the World Health Organization (WHO) has confirmed that there is no specific medication currently available to treat COVID-19 stating that, "clinical trials are under way, but there is no mention of a cure being established".

Although Agnihotri spread a misleading—and potentially dangerous—piece of misinformation, the fact that it generated such rapid online momentum is a testament to the increasing global awareness of cannabis as a healthcare treatment option.

In fact, there is a growing body of research which suggests that cannabis might even be the next big weapon in our fight against superbugs, thanks to its potent anti-microbial qualities.    

The world has been in a panic ever since the new Chinese coronavirus disease—which is now officially known as COVID-19—began stoking fears of a global pandemic in early 2020.

How Cannabis Fights Superbugs   

In January 2020, a team of researchers at McMaster University in Hamilton, Ontario, uncovered further evidence that cannabis can be used to wipe out antibiotic-resistant bacteria and other superbugs.

As part of the study, researchers screened five unique cannabis compounds for potential antibiotic properties, before eventually identifying one—known as cannabigerol or CBG—which demonstrated a particularly robust profile when it comes to killing off methicillin-resistant Staphylococcus aureus (MRSA).

This is huge news, as MRSA is one of the most common hospital superbugs and is responsible for approximately 20,000 deaths per year in the US alone.

There is much work to do to explore the potential of the cannabinoids as antibiotics from the safety standpoint.

McMaster University Lead Researcher, Dr Eric Brown   

More importantly, the scientists also discovered that CBG—which has no psychoactive qualities—is highly effective at eliminating not only MRSA microbes, but also the "persister" cells that are responsible for repeat infections.

CBG was even found to be a potent cleanser of the hard-to-remove "biofilm" that typically builds up on a patient's skin or medical implants as a result of the infection.  

Following their success in a laboratory environment, the researchers subsequently elected to test CBG's ability to treat MRSA infections in animals.

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While this study is still ongoing, initial results have shown that CBG can cure MRSA in mice as effectively as the medicine Vancomycin, which is currently used as a weapon-of-last-resort for treating drug-resistant infections.

The lead researcher behind the project, Dr Eric Brown, was enthusiastic about the team's discovery, noting that cannabinoids are "clearly great drug-like compounds".

"We are now pursuing the required paperwork to work with a wide variety of cannabinoids," Brown said.

Pot Stock Pandemic

In response to growing fears surrounding the spread of COVID-19, at least 14 countries—including America, Australia, India and Hong Kong—have begun enacting increasingly aggressive measures to stem the tide of outbreaks.

The most prominent of these crackdowns has been the introduction of quarantines, travel bans, import restrictions, and in some cases the forcible closure of businesses.

However, this may end up having an unintended knock-on effect when it comes to the global cannabis industry, as a number of sectors rely heavily on the Chinese manufacturing and supply chain, due to its low labour costs and capacity to mass produce commercial products.   

For instance, cannabis cultivators could soon find themselves paying more for products such as lighting systems and heating, ventilation, and air conditioning (HVAC) technology.

Many companies were unprepared for this level of event and hadn't really thought that a shutdown of a significant proportion of China's production capacity was really something they needed to prepare for.

US China Business Council Senior Vice President, Jake Parker

While this may seem like a small issue, it could lead to some serious pain for vertically integrated US pot growers, as they already spent much of 2019 wrestling with higher price points for LED lightbulbs and HVAC systems as a result of the trade war between China and the US.      

And the news is even worse news for ancillary pot stock, KushCo Holdings (OTC:KSHB), as the company may find itself in dire straits if import restrictions aren't eased soon.

The problem is that KushCo sources a considerable amount of its packaging material from China—along with its entire supply of vaporizers—leaving the company vulnerable to serious product shortages later in the year. If this happens it could prove disastrous for the company, as KushCo currently generates the majority of its revenue from vaporizer sales.

According to the Chair of the US Federal Reserve, Jerome Powell, this is a serious possibility, as the coronavirus is "very likely" to have a disruptive effect on the financial system of multiple international markets.

"Some of the uncertainties around trade have diminished recently, but risks to the outlook remain. In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy," Powell said.

The CEO of vape manufacturer Cloudious9, Richard Huang, also echoed this point, stating that "the coronavirus has had a significant impact on the entire manufacturing supply chain in China, which will be felt in the coming months."

"It could be a very difficult year for hardware companies trying to maintain a steady supply of inventory," Huang said.

Even some of the industry's bigger players like Cronos Group (NASDAQ:CRON) are likely to be impacted, as cannabis derived products and alternate form factors—such as vapes, extracts and edibles—are some of the biggest moneymakers in the market right now, since they offer a considerably higher margin when compared to dried flower.

Unfortunately, this means that Cronos Group's revenue growth could be at serious risk if a vape shortage does occur, as it would likely lead to an attendant slowdown in the sale of cannabis derivatives.  

Hopefully this can be prevented, though the CEO of a vape hardware manufacturer known as The Blinc Group, Arnaud Dumas de Rauly, has warned that it may be impossible to avoid.

"If several key raw material suppliers suddenly close down or are several months late in their shipments, it will constitute a threat to our timely fulfillment capabilities," Dumas de Rauly said.

What's the Prognosis?

While investors should exercise caution considering the disruptive effect that the COVID-19 outbreak is expected to have on Chinese manufacturing, at this point a full-blown panic still feels unwarranted.

Even though the possibility of further trade restrictions may seem alarming, the same thing also occurred during previous epidemics—including the SARS, MERS and avian flu health scare—all of which had a far more limited effect on the global stock market than originally predicted.  

Although some pot stocks may end up falling victim to the contagion, if history is anything to go by then the infection will be mercifully short-lived.  


This could be one of the best investing opportunities of 2020

Legislative changes are blowing through the US, and with it, an ever-increasing number of states legalising cannabis for recreational use.

With the success seen in Illinois, which legalised for adult-use on January 1 and saw products moving off the shelf at an unprecedented rate, this company is primed to take advantage of the booming US recreational market.

They have secured partnerships with the biggest cannabis companies in the US, and their portfolio is second to none.

And with the sector-wide pullback of 2019, this company is now at a bargain-basement price.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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