Cannabis and Coronavirus: Back to Business as States Start ‘Reopening’

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Cannabis dispensary offers pickup service due to COVID-19 restrictions. (Image: Paul McKinnon / Shutterstock.com)

With Memorial Day fast approaching, some states in the U.S. started slow “reopenings,” despite warnings from public health experts that returning to pre-pandemic social norms would cause a spike in death tolls from COVID-19.

For cannabis vendors and other storefront retailers, the new normal includes personal protective equipment (PPE) and sanitation protocols while at work, as well as a lot of uncertainty around the post-coronavirus economy.

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Delivery services have emerged from the crisis as a necessary component of retail sales, especially in the grocery sector. The crisis has pushed more consumers to buy online, now that long lines, social distancing, and supply shortages have affected the in-person shopping experience. Digital retailers like Amazon and shopping apps like InstaCart have struggled to keep up with the increase in orders.

Delivery also has grown more popular in cannabis retail, along with curbside pick-up, and in-store sales with social distancing standards in place.

Cannabis tech systems company Akerna analyzed data from its seed-to-sale management software, called MJ Platform, and found a dramatic surge in curbside pick-up orders in Nevada, after state officials gave a green light to the practice on April 30.

“When Governor Steve Sisolak announced the state is allowing curbside pickup of marijuana products at Nevada dispensaries starting Friday, May 1, we started watching to see if it would help sales in the state increase,” Akerna Business Intelligence Engineer Ryan Ballman said in a press release. “Over the weekend, pick up as a fulfillment method surged from 3 percent to 47 percent of total sales.

“While total sales have not seen dramatic increases, what is interesting is the rapid adoption of this fulfillment method for the state,” Ballman added. “Another interesting point from the data is most of the pickup orders have been on the recreational side, accounting for 95 percent of those orders. Not many medical customers seem to have taken advantage of curbside pickup.”

Other business statistics winnowed out by Akerna’s MJ Platform included:

  • The average recreational ticket size nationwide (excluding Nevada): $75.38.
  • The average recreational ticket size in Nevada: $108.41.

(**The Numbers, year-over-year, April 2020 compared to April 2019: Total cannabis sales increased 68 percent, with an average ticket size of $123.)

Top product categories across the MJ Platform database included:

  • Concentrates increased 22 percent, accounting for 11 percent of total product sales.
  • Cartridges/pens increased 3 percent, accounting for 35 percent of total product sales.
  • Infused edibles decreased 18 percent, accounting for 9 percent of total product sales.
  • Flower maintained, accounting for 43 percent of total product sales.

Nevada-based MJ Holdings, Inc., lauded Governor Sisolak’s decision to allow curbside pick-up at dispensaries, as vendors adjust to the state’s slow reopening.

“Many dispensaries were unprepared to switch to a delivery-only model and had remained closed from March 20 until now. We expect wholesale and retail sales to slowly rise as all of the state’s dispensaries reopen for curbside pickup. The recently formed Nevada Cannabis Compliance Board, which will take over regulatory authority from the Department of Taxation on July 1, 2020, is overseeing the dispensary re-openings and their plans for curbside pickup,” the company said in a press release.

“Our sales momentum was steadily increasing in the second half of the first quarter before coming to a halt in late March due to the COVID-19 pandemic,” said MJ Holdings Chief Executive Officer Paris Balaouras. “We are happy to see the dispensaries coming back online and we are well positioned to serve their needs.”

Canadian chain retailer Tokyo Smoke has added same-day delivery from its Toronto, Ottawa, Cambridge, Stoney Creek, Thunder Bay, and North Bay stores located in Ontario, Canada.

“This fast, easy-to-use delivery service will allow Tokyo Smoke store teams to continue serving their communities, while providing a safe and convenient option for guests looking to stay at home,” the company’s press release said. “All orders will be delivered same-day, provided customers order before the store’s specified cut-off time, and includes all product formats available in-store, including dried flower, edibles, and beverages.”

In late March, as a response to the coronavirus pandemic, the chain also rolled out its “Click and Collect” program, allowing local customers to order online for curbside pick-up. Tokyo Smoke’s parent company is cannabis multinational Canopy Growth.

Cannabis venture capital firm Vencanna Ventures, and parent company Top Strike Resources Corp., gave a market update about the pandemic’s effect on medical cannabis markets in Ohio and New Jersey.

The Ohio market has experienced continued growth, Vencanna said in a press release, and noted pandemic-related changes that loosen some retail cannabis restrictions would likely lead to increased sales.

“In light of COVID-19, Ohio’s Medical Marijuana Control Program recently changed a number of rules for buying cannabis; patients can make orders over the phone, curbside delivery is allowed, and most importantly, Ohio’s 90-day limit has been split into two 45-day purchasing windows (patients no longer have to buy their 90-day supply all at once),” the company said.

“Further, like most states, Ohio has seen a steady growth this year. March state sales were approximately $13 million, the highest sales month in its history and as of March 31, 2020, there were 94,356 registered patients, according to the Ohio Medical Marijuana Control,” Vencanna added.

In New Jersey, the announcement of approved licenses applications was expected by mid-March, Vencanna explained, but has been delayed by pandemic-related regulatory changes.

“The licenses to be awarded include fifteen dispensary, five [in] cultivation, and four full vertical licenses. If an applicant applied for a full vertical license, that applicant was excluded from applying for the dispensary or cultivation licenses. There are currently twelve license holders in New Jersey (each consisting of cultivation, processing, and three dispensaries),” the company said. Vencanna has submitted applications for dispensary and cultivation licenses in New Jersey.

The National Cannabis Risk Management Association (NCRMA), based in Pittsburg, will offer a complimentary pandemic risk management and compliance webinar, which will include pandemic health and hygiene standards and guidelines for cannabis businesses.

“As multiple states move to reopen businesses, we wanted to provide a resource to help cannabis owners ensure the safety of their employees and customers,” said NCRMA’s Chief Risk Management Officer Alex Hearding. Hearding will instruct the hygiene webinar. “This debut course will cover a number of health protocols, including appropriate cleaning and disinfection practices, hygiene, and hazard controls.”

The webinar will be held May 14, at 1 p.m. EST, on the Zoom platform. To register or for more information, visit NCRMA.net.

“The cannabis industry continues to expand at a rapid rate and there are so many entrepreneurs and investors who can benefit from the knowledge and support that NCRMA has to offer,” Hearding added. “The curriculum that we are developing is in response to what our members have said they need, and it will be continuously updated to remain relevant.”

Massachusetts legislators have petitioned the state senate to establish a Massachusetts Paycheck Protection Program (PPP), to make pandemic emergency relief available to businesses that do not qualify for federal programs under the U.S. Coronavirus Aid, Relief, and Economic Security (CARES) Act, like businesses in the legal cannabis industry.

Unlike in other legal states, Massachusetts Governor Charlie Baker did not declare the state’s adult-use cannabis businesses as an “essential service” during the pandemic. Nonessential retailers in the state are scheduled to remain closed until May 18.

Massachusetts retailers, wholesalers, and cultivators also have expressed concerns about the effect of the shutdown on supply lines, as the state reopens.

Legislators who signed on to the petition included Diana DiZoglio, Lenny Mirra, Patricia D. Jehlen, Adam G. Hinds, and other members of the General Court.

However, despite Small Business Administration (SBA) rules excluding federally-illegal businesses from financial aid, Denver-based cannabis platform MassRoots reported it had received a $50,000 loan from federal PPP funding, under the CARES Act.

“I’m pleased to report MassRoots has raised significant capital to fund our operations and, later this month, launch our rewards program—MassRoots Rewards—aimed at driving cannabis demand from our community to client dispensaries,” MassRoots’ Chief Executive Officer Isaac Dietrich stated in a press release.

The company said it will combine the federal loan with $300,000 of recently acquired bridge funding, to ensure ongoing operations and growth. The federal loan is subject to forgiveness or partial forgiveness, if MassRoots complies with PPP loan regulations.

“We’ve slashed our monthly expenses to less than $75,000 per month, negotiated far better rates and terms with our vendors, and built a rewards model we believe can gain widespread adoption while generating positive cash-flows. We’ve learned many important lessons in the five years since MassRoots became a public company—and we’re now positioned to combine that knowledge with an unparalleled work-ethic to deliver results for all our shareholders,” Dietrich said further.

Publicly traded cannabis real estate investment trust Innovative Industrial Properties announced rent deferral for its clients during the pandemic crisis. The company’s latest earnings report said the deferrals were given to three of the trust’s twenty-one tenants, after conversations with tenants regarding March and April. Those with deferrals were allowed to use security deposits for April rent, while May and June could be deferred, with repayment beginning in July.

“Our thoughts are with all of those who are affected by these events, and we are truly grateful for the selflessness and tireless efforts of the medical professionals, caregivers, and researchers who are working on the front lines to fight this new coronavirus,” the company website read.

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