After hitting the halfway mark on the year and as we emerge from the pandemic, one has to wonder what the rest of the year will be like for cannabis businesses and those who work to insure them.
The industry weathered COVID-19 well thanks in part to dispensaries being declared essential by so many states. We also saw several states legalize it, including New York, and more recently Connecticut – and we can probably expect a few more states that go that route before the year ends.
The new markets alone should be enough to continue to drive sales and create more opportunities, so it might be easy to just say that things look bright for the industry, but there are still numerous questions about what we can expect in the next six months.
Many dispensaries were allowed to start making deliveries and offering curb-side pickup to better enable social distancing, a likely boost to sales. With the pandemic winding down, will those businesses be able to keep offering those services? Congress for the last few years has toyed with legalization and safe banking. With so many big fights brewing between the two parties, will we see any national legislation before 2021 ends? How will consumers feel about weed in a post-pandemic world with a buffet of other options – things to do, places to go, food to eat.
In the latest Insuring Cannabis Podcast, we spoke to a pair of experts to get those and other questions answered.
Following are brief takeaways from that conversation.
In a number of states during the pandemic, things that weren’t allowed under previous regulations, such as curbside pickup and delivery, became allowed to permit cannabis businesses to operate under safety protocols for social distancing.
Maintaining those changes should be a top priority for the industry over the next six months, according to Morgan Fox, media relations director for the National Cannabis Industry Association. The NCIA is the largest trade group representing cannabis businesses.
“These were clear public health wins, but these services had previously been denied to cannabis businesses, despite the fact that they were available to basically all other legal businesses. Including alcohol companies, where delivery was being made more and more easily available,” Fox said. “And during the pandemic, the cannabis industry has shown that it is fully capable of being able to operate under the same rules and regulations that other businesses are. And that these services and allowances are something that they can affectively provide without creating any sort of issues.”
Fox believes many of these regulatory changes may just continue de facto, but there may be some local and state government entities that review the new previsions as the nation exits the the pandemic.
“And so it’s going to be incumbent on lawmakers and other policy makers and regulators, as well as the industry, to continue working on and building the positive interactions that they’ve had,” Fox said. “And be able to continue these policies, which are beneficial for patients and consumers. They’re beneficial for businesses. And they’re certainly beneficial for the general public in terms of public safety and safe, legal access.”
One bet that’s nearly sure is that cannabis sales will continue to rise – if, for no other reason, because of the new states that are adding to the growing list of states where cannabis is legal for recreational or medicinal use.
Data and analytics firm Headset expects sales growth of 25% or more for the remainder of the year.
The firm’s June outlook showed growth in total sales, year-over-year sales growth and growth in average basket size. California, for example, is expected to have ended the month with $429 million in sales, up 9% from a year earlier. In Colorado, year-to-year sales are expected to have increased 4% to $155 million.
“I think that the next six months we’re going to see continued growth, continued cannabis sales on the same trajectory that we saw last year, even in a post pandemic world,” said Cy Scott, co-founder and CEO of Headset. “If I had to make a prediction, that would be the case. And I think it’s because of new behaviors that are developed over the time of the pandemic, whether that’s the way they purchase cannabis, things like the delivery have opened up in a significant way.”
He also expects multi-state operators, or MSOs, to be active.
“So you’re starting to get some significant scale,” Scott said. “You can see retailers where they have a footprint in 10, 15 different regions, which is no easy feat because its different frameworks in every state. They’re able to launch new product lines at once, and across a wide population base because of that. But I think you’re going to continue to see more of that. You’re going to see large-scale operators in California, trying to move to these limited licensed markets. And you’re going to see these license holders and the limited license markets, markets like Pennsylvania, for example, moving towards California.”
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