With cannabis deemed "essential" and pot purchases skyrocketing, many are wondering if the COVID-19 pandemic will cement cannabis's place in society.
Today is 4/20, a day in which the fledgling cannabis industry can celebrate the strides made in recent years to make weed legal and accessible for those who wish to consume it.
However, unlike previous 4/20's, this one will be starkly different. What should have been a month-long cannabis-filled celebration has instead been tarnished by the COVID-19 pandemic, forcing citizens to remain at home at virtually all times. As a result of lockdowns, economic activity has slowed down to recession levels, and unemployment has skyrocketed to over 4.4%.
The cannabis industry has not escaped unscathed from the COVID-19 fallout, with enormous companies like Canopy Growth and Aurora forced to take serious cost-cutting measures to keep afloat. Then came the news that New York wouldn't be legalizing cannabis in this year's budget, despite the Governor suggesting otherwise. And lastly, with cannabis companies not eligible to receive any stimulus funding during these unique and difficult times, many companies are walking on the edge of bankruptcy.
Though it isn't all doom and gloom for the cannabis industry, and in fact, there have been some real positives during this pandemic that serve as a crucial reminder that cannabis is here to stay.
The first, and most prominent good news for the industry is that 9 of the 11 states that have legalized cannabis for recreational use have deemed cannabis dispensaries as "essential," meaning that they are allowed to remain open while other stores are required to close during the COVID-19 lockdowns.
The same occurred in Canadian provinces like Ontario, who initially attempted to deem their dispensaries "inessential" but had to flip on their decision due to public pressure.
Then there was the perceived stockpiling effect, in which people purchased months' worth of cannabis all at once in expectations of a lockdown, sending cannabis sales skyrocketing. Now, in places like Ontario, it's become clear that these sales increases are remaining relatively consistent despite the news that cannabis dispensaries wouldn't, in fact, be closing.
So what does COVID-19 mean for cannabis legalization?
There are several reasons that the coronavirus pandemic may prompt a renewed perspective upon cannabis legalization from State Governments.
Firstly, the designation of cannabis as an "essential" industry reflects the acknowledgment by States that cannabis is an integral part of many people's lives, whether for medicinal or recreational purposes. This is an acknowledgment that the cannabis industry has never seen, and one that will likely change the course of the industry for years to come.
Secondly, amid an economic recession, cannabis dispensaries are showing continued economic stimulation. This has been true of the industry at large since cannabis was first legalized, with early-mover states like Colorado generating over USD $1bn in cannabis sales since 2014, and more recent states like Illinois generating over $100 million in the three months that cannabis has been recreationally legal. Given cannabis's history for job creation, and it's more recent success amid the COVID-19 pandemic, it'll be hard for legislators to ignore opening further avenues for cannabis companies when thinking of ways to regenerate economic growth.
Thirdly, much like the public outcry that resounded in Ontario when cannabis dispensaries were forced to close, many within the cannabis industry are pleading to lawmakers to include cannabis in the CARES Act, the Coronavirus Aid, Relief and Economic Security act which provides economic stimulus to companies affected by the crisis.
In fact, 34 members from congress have sent a letter to the Senate of Representatives leader Nancy Pelosi requesting that she reconsider the decision not to include cannabis companies in the stimulus package.
"The COVID-19 outbreak is no time to permit federal policy to stand in the way of the reality that … state-legal cannabis businesses are sources of economic growth and financial stability for thousands of workers and families, and need our support," the letter outlined.
"The state-legal cannabis industry is a major contributor to the U.S. economy and workforce, employing over 240,000 workers across 33 states and four territories, and generating $1.9 billion in state and local taxes in 2019," the advocates and lawmakers wrote in the letter. "State-legal cannabis businesses need access to CARES Act programs to ensure they have the financial capacity to undertake the public health and worker-focused measures experts are urging businesses to take."
Time will tell if Pelosi chooses to include cannabis in the CARES act, however, now is a time when lawmakers have the opportunity to truly decide if they want to legitimize the cannabis industry by giving it federal support. While the COVID-19 pandemic has undoubtedly put an enormous strain on the lives of virtually everybody, the crisis may also push governments to rethink where they stand on cannabis, and prompt them to make actual change.
And with the Presidential election coming in November, the waves of legislative change may indeed be upon us.
This pot stock could reach new heights in 2020 due to Coronavirus
The COVID-19 pandemic is showing no signs of slowing down, and as global markets enter meltdown many cannabis companies are feeling the effects of capital crunch.
While the market crash will continue for some time, it represents a golden opportunity for investors who are capable of riding out the volatility until share prices rally.
Luckily, one pot stock has developed antimicrobial drug that can already treat two superbugs while limiting their ability to develop antibiotic resistance.
Investors can also start picking up shares at rock bottom prices, as global investor sentiment continues to dampen thanks to COVID-19.
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