This was a year like no other. With orders for safer homes beginning in March, the coronavirus pandemic drove people off the streets and into their homes. Restaurants, retail, travel, and most other industries have had to rethink their business operations – if they were able to do business at all.
Among those considered essential was the cannabis industry.
It was a very different prediction for cannabis this year before the pandemic. With Neuland, nobody really knew how the business would fare. So what happened David Downs, the California office manager for Leafly, examines what this year meant for weeds.
KCRW: Last year you predicted that 2020 would be a year for the California legal cannabis market, which was exceeded by three to one with underground sales. How did it go this year?
David Downs: “It’s fair to say they made it and didn’t break it. The fact that cannabis was classified as essential in March and stores could stay open and the supply chain can continue to process cannabis was a turning point for the marijuana rights movement.
And then the cannabis industry adapted to the corona to increase the PPE, spacing and masking so they were able to weather the pandemic, keep their employees safe and protect consumers and really drive those sales.
The industry has faced a series of headwinds this year that countered the tailwind of becoming indispensable. They continue to be penalized by the federal tax law that says they are drug traffickers.
While a normal business could have a corporate tax rate of 21%, the effective tax rate for cannabis companies is 70 or 80%.
Another important factor: licensing. California has only one-tenth the number of pharmacies per capita than a state like Colorado. Although hundreds of new pharmacies went online in California this year, there is still a waiting process of months or years and costs in the millions or tens of millions of dollars to actually open the doors to the cannabis business, whether it is a farm or a retail store. “
How has COVID-19 affected the industry?
“Well, two things. First, we’ve seen cannabis regulations move in weeks and months at what would normally take years. So the pickup was quickly switched on at the roadside. Drive through was switched on.
A number of ways to get cannabis that would have got stuck in regulatory scrutiny have been automatically lit green under emergency powers. For this reason, and due to other factors, cannabis use has increased significantly in both new and mature markets across the country.
We have delivery services that are seeing a 100% increase in business year over year. We believe the numbers have really increased because the fear out there, the insomnia out there, and then a lot of travel budgets, food budgets, and other income were diverted to cannabis because people had to sit at home. “
How has food developed in this market?
“The raw flower has the largest share of the market. And then the other half of the market is split between extracts and food. So food made up about 25% of sales and was very strong throughout the pandemic, especially as people became cautious about putting something in their lungs. “
Before COVID-19, West Hollywood opened one of the first cannabis cafes. What could we see when al fresco dining is allowed again?
“At Leafly, we envisioned that 2020 would be the year the lounges expand and COVID-19 really throws a curve ball.
The problem of coming together in a commercial space to consume cannabis has continued to be a bridge too far for many local cities and counties, even in states like Colorado, which have been legalized since 2012.
The coronavirus has closed the lounges here in San Francisco and across the state, and it has really hampered the movement to more of them.
The entire cannabis tourism industry had big plans for 2020 that were put on the shelf because we couldn’t work on experiences with cannabis breweries or cannabis wineries, or those comparable to the alcohol experiences people wanted to push forward this year. “