Cannabis: An Essential Business
COVID-19 has forced over a billion people to stay at home globally.
And state governments in the U.S. have deemed only essential businesses stay open.
Businesses like utilities, grocery stores and… cannabis dispensaries?
You heard me right.
Lobbyist groups have pushed states to keep open shops and dispensaries for medical patients that need it for therapy.
Just like you wouldn’t give up your heart medication, medical marijuana users won’t give up their prescriptions.
Cannabis has shown to help relieve pain, control nausea and vomiting caused by chemotherapy and reduce anxiety among users.
And since recreational marijuana became legal in several states, many medical users have used these shops to fill their medical needs.
Why wait in line at the CVS for a government-issued strain when you have access to a chain that caters to consumer consumption?
Although the shops and dispensaries have stayed open, people are stockpiling cannabis in preparation for staying home.
Just like you may have seen at your local grocery store, cannabis products have been flying off the shelves.
Across the United States, stores and dispensaries have seen an uptick in clientele.
Tedd Wetherbee, owner of The Gallery, a chain in Tacoma, Washington, noted:
Listen, when the people are in a state of unease about something like COVID-19, they need to know that they can manage their stress and anxiety. What better way to do that than with cannabis? Our sales are up and we’re happy that we can be a part of making people feel better about the madness going on around them.
But what happens when the weed runs out?
In fact, going back to 1928, those three years — 1929, 1987 and 2020 — have been the only three in history where a bear market has followed directly from all-time highs in the S&P 500 and its predecessors.
Last week, I shared a chart showing the similarities. Here’s the updated version this week:
With more stay-at-home orders, people have also turned to weed delivery services when they’re available. And state governments have expanded programs to help promote these services.
For instance, tökr, a Los Angeles-based cannabis delivery service, saw an increase in sales of over 250% in mid-March. And with California still on lockdown, it’s likely the demand for delivery services will stay high in place of going to a physical dispensary.
The Market Picture
While 2019 proved tough for the larger cannabis growers, this increased demand could help them swing back the other way.
This especially gives cannabis companies an opportunity to unload some of their excess product.
Last year, many companies were plagued with overproduction and not enough demand.
Coming out of this, many companies should get a fresh start. And if they learn from their past mistakes, they can temper their expectations and slowly grow their operations.
Companies like Tilray Inc. (NASDAQ: TLRY) fit into this category. Once trading for a ridiculous $300, Tilray’s lost over 90% of its value over the past year.
But this bump could help shed the investor woes and get it back on track.
Across the scene we’re seeing these bumps with upgrades in names like Aphria Inc. (NYSE: APHA).
And though 2019 was one of the roughest years on the books… 2020 looks hopeful.
To a bright future,