Business

As the global economy takes a COVID-19-triggered downturn, what can the cannabis industry expect?

Is cannabis recession-proof? Many industry experts have weighed in with a resounding "Yes!" But is this entirely realistic or just wishful thinking? The nascent cannabis industry may come out of the pandemic in better shape than many others, but it's likely to go through a period of significant transition.

There are more headwinds this month that will likely impact pot sales.

March was a strong month for pot sales. As the coronavirus pandemic put consumers on edge, many people loaded up on cannabis, presumably in anticipation of prolonged stays at home. However, the data suggest that sales surged during the first half of the month, while sales began to decline toward the end of the month. Some industry experts went so far as calling pot "recession-proof" and similar to alcohol in its resiliency.

Alan Brochstein, founder of 420 Investor and New Cannabis Ventures, joined Benzinga’s PreMarket Prep show Monday to discuss how the cannabis industry and its main players are navigating the looming recession.

In recent weeks, some financial commentators have viewed the recent spikes in cannabis sales as a predictor of a bright future for the industry. Brochstein’s expectations paint a less rosy picture for cannabis companies. 

Why these three stocks are well poised to take advantage of the cannabis boom.

Marijuana investors have seen a massive erosion of wealth over the past 12 months. Companies in the cannabis sector were expected to consolidate sales in a high-growth market in 2019; instead, they were affected by lower-than-expected growth, high inventory levels, regulatory issues, health concerns arising from the use of vaping products, and more.

The cannabis lobby is flexing its muscle in Washington and seeking aid for small businesses in the next coronavirus relief package.

The marijuana industry has already found help at the state level. Twenty states, the District of Columbia and Puerto Rico are allowing medical cannabis dispensaries to remain open during the pandemic, and eight states allow both licensed recreational and medical cannabis dispensaries to operate. Cannabis groups are pushing for more states to allow legal marijuana markets to remain open and are seeking funds in state aid packages.

As the coronavirus spread across the country in March, and stay-at-home orders began to go into effect, every state with a regulated cannabis system allowed weed sales to continue in some form, deeming medical-marijuana businesses 

Before it ends, the coronavirus crisis described by the U.S. government as "our Pearl Harbor moment" will likely kill hundreds of thousands of Americans while the nation sinks further into recession, if not a full-blown depression. Small businesses will shutter. Hourly workers will become homeless. Unemployment will continue to soar, exposing a fragile system left in place after decades of globalization.

Canadian cannabis company Aphria jumps after posting a surprise fiscal third-quarter profit and sales that were double analysts’ forecasts.

Canadian cannabis company Aphria  (APHA) - Get Report was a rare flicker of light in an otherwise down market on Wednesday as a surprise fiscal third-quarter profit and sales that were double analysts’ forecasts sparked investors to push up the stock nearly 20%.

Canadian marijuana stocks have been hammered, but these select cannabis companies are on track to deliver the green next year.

If you think oil and gas stocks have had a rough go of things in recent weeks, take a gander at marijuana stocks since March 31, 2019. Over the past year and change, most cannabis stocks have lost at least half of their value, with the losses being especially noticeable for Canadian pot stocks.

The industry has been hammered by high taxes, local opposition to retail stores, the vaping crisis and more. The coronavirus creates a new opportunity and another potential crisis.

As the novel coronavirus rages on, few industries have experienced quite as many highs and lows as California’s cannabis industry.