|Several reasons explain this drop. Panic buying subsided once cannabis businesses were declared essential. The stay-at-home orders meant that fewer people ventured outside, while legal cannabis cross-border ecommerce remains illegal. It is safe to assume that the black market compensated anywhere the legal supply chain was disrupted.|
What can we say about the future? In the medium to long term, the cannabis industry should revert to strong growth. The shorter term, however, remains uncertain. Cash is king these days. Many cannabis businesses were struggling before the crisis due to falling prices and intensified competition. These companies will find it even harder to survive if they are not able to receive government help since cannabis remains illegal on a federal level. Federally regulated banks are also unlikely to come to the rescue. Cannabis markets which depend on tourism to drive business, such as Las Vegas and Amsterdam, are likely to suffer during the coming months.
The stronger players, those with sound business plans, efficient operations, healthy cash reserves and trusted brands, will benefit from the shakeup. Governments facing economic peril may also be motivated to advance legalization faster than before being a source of employment and tax revenue. Last but not least, research underway may reveal that cannabis can be helpful in the fight against COVID-19. That would certainly put the industry in pole position for a strong rebound.