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Cannabis Covid-19 Bump May Not Be Enough For Marijuana Suppliers

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Despite their designation as an essential service during the Covid-19 pandemic and a recent bump in sales as consumers rushed to stock up on supplies, cannabis companies could face significant weakness in the second quarter as a whole, according to Canaccord Genuity analyst Bobby Burleson.

Cannabis analytics firm Headset has documented a spike in cannabis sales as cities and states declared lockdowns and asked residents to stay home. Many consumers were worried about their supplies and ran out to the stores, leading to long lines and active cash registers.

Headset said sales on March 16 rose by 159% in California, 100% in Washington and 46% in Colorado. Burleson said he believes other states are experiencing similar jumps in business. However, many of the companies Burleson covers said they anticipate net lost revenue due to diminished foot traffic that would only partially be offset by delivery services.

For example, Planet 13 Holdings Inc. (PLNHF) has begun 24-hour delivery services to address pandemic social distancing. However, because the superstore is located in Las Vegas, which is essentially shut down, sales are expected to decline dramatically. This dispensary depends heavily on tourist traffic, which is now nonexistent, and there is no way to know when that traffic will return.

Some states have stepped up to assist cannabis sellers by permitting delivery in areas where it wasn’t allowed or allowing them to provide curbside service. Some areas are allowing the dispensaries to stay open if social distancing measures are enacted.

Source: https://lacannabisnews.com/cannabis-covid-19-bump-may-not-be-enough-for-marijuana-suppliers/

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