While the COVID-19 pandemic has damaged a wide range of industries around the world, it looks like cannabis might not be one of them. An industry white paper last week shows that the cannabis industry’s 2020 growth is currently outpacing that of 2019. Hiring for cannabis companies os also already on the rebound, and retailers are actually purchasing more product from companies than they were prior to the pandemic.
Legal sales have boomed since March, though it’s hard to say how many customers previously bought from illegal dealers.
The legal marijuana industry has spent years battling illegal sellers who have eaten away at its market share and undercut its prices.
But the coronavirus has proven to be a boon for legal pot shops, as customers fear the risks associated with inhaling questionable products and are nervous about letting sellers into their homes.
At the turn of the century, if you had told somebody that recreational marijuana would be legal across many states in this country, they probably would have laughed. Nobody is laughing now as the industry continues to grow at a breathtaking pace. Currently, the District of Columbia and 11 states (Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington) have adopted the most expansive laws legalizing marijuana for recreational use.
Events over the last nine months have created an opportunity for investors new to the cannabis space. The recent restriction of capital, coupled with the halting of the economy due to the COVID-19 crisis, has resulted in the creation of distressed cannabis assets in need of funding.
Given the steep discount in company valuations, now could be one of the best times in history to invest in the cannabis space.
The House of Representatives on Thursday added an amendment to a spending package that would protect state-legal marijuana businesses from the Department of Justice.
The amendment, according to its description, would “prohibit the Department of Justice from interfering with state and tribal cannabis programs.” Congressional Cannabis Caucus founder Rep. Earl Blumenauer, D-Ore., sponsored the amendment, which passed 254-163, including 31 Republicans who voted in favor of it.
A new report out examining how the COVID-19 pandemic impacted the U.S. cannabis industry shows consumer purchasing spiked, dropped, then started to stabilize in the time between when things began to unravel for the nation in March until recently.
In other words, it appears that the experience for cannabis, as a product, wasn’t much different from other mainstream products, such as toilet paper, certain foods, and other essentials.
It is a fact that the legal cannabis industry has tremendous potential to generate significant tax revenue for states and municipalities in the years ahead. Earlier this year, for example, the California Department of Tax and Fee Administration reported that, from the day legal cannabis retail sales began in January 2018 until January 2020, the state had already collected more than $1 billion in taxes. And those are only state-level taxes.
For startups and established businesses, compliance issues can be time-consuming and confusing. But they don't have to be daunting.
Despite the massive growth in the cannabis space over the last decade, the industry is often more heavily scrutinized than other industries. But unfortunately, many cannabis businesses — especially those on a smaller scale — aren’t adequately prepared to deal with compliance issues, putting them at risk of facing heavy fines, losing their licenses, and even going out of business.
