Coronavirus Hits Cannabis Markets Unevenly
While the COVID-19 pandemic continues to dampen adult-use marijuana sales in most U.S. markets, Washington state experienced its strongest month of cannabis sales yet – highlighting the diversity of legal markets.
According to point-of-sale data provided by Seattle-based Headset, April 2020 recreational marijuana sales in Washington state eclipsed $106 million, a record for the state.
Adult-use cannabis sales in California still rose in April 2020 compared to April 2019, but the gain was substantially less compared to monthly sales growth before the pandemic. In Colorado and Nevada, monthly sales declined on a year-over-year basis for the second consecutive month.
The data provides some evidence that demand for cannabis holds strong – and perhaps even increases – during times of significant financial duress.
However, April marked only the first full month of cannabis sales during an economic crisis that could last for some time – meaning it remains too early to tell if cannabis sales will prove “recession proof,” similar to how alcohol sales fared during the Great Recession.
But Washington state might represent the best test case for this. The market is relatively mature, and it generates a higher portion of sales from local customers as opposed to tourists, unlike other mature markets such as Colorado.
Sales of adult-use cannabis in both Washington and Colorado – the first two states to legalize recreational marijuana – began in 2014. The coronavirus pandemic marks the first time the legal cannabis industry has existed during an economic crisis.
While California’s marijuana industry isn’t tourist-driven, it’s a very nascent market that’s dealing with a bevy of other challenges, including high prices, a lack of retail stores and an entrenched illicit market.
Nevada’s cannabis industry has been rocked by the pandemic, with sales to tourists having all but disappeared and retail stores forced to route all sales through delivery services.
While not as reliant on tourists as Nevada, Colorado’s marijuana industry generates a significant amount of revenue from out-of-state visitors coming to the mountains for skiing and snowboarding – a source of sales that’s evaporated since the pandemic closed many of the resorts early.
All adult-use cannabis markets got a boost from the stimulus checks that went out around April 15. But sales on 4/20 – traditionally the biggest sales day of the year – were soft relative to 2019.