Steven DeAngelo has seen it all. As the so-called "father of the legal cannabis industry," he co-founded one of the largest vertically integrated licensed cannabis businesses in California, called Harborside, with four stores and $60 million in annual revenues.
But what's happened in the last month is something new. "We had our largest sales day ever," he said. "Sales are up 20-25% at all locations."
Across the country, sales are sky high in states where legal cannabis has been declared "essential medicine" during state shutdowns, allowing stores to stay open.
Customers appear to be stocking up, and many stores are shifting to delivery. It's also possible the industry is reaching new customers who, until now, have bought their pot illegally, but want to now take advantage of regulated product delivered to their doorstep.
Here are some data points from industry players:
- Average store revenue is up 52% to 130% compared with January at more than 1,300 stores using cannabis e-commerce platform Jane Technologies.
- Jane also reports the number of new users ordering online has increased 142% over the last month.
- Beverages and edibles are seeing significant sales lifts in California, according to cannabis analytics firm Headset.
- Wholesale marketplace LeafLink reported a 48% spike in orders Monday versus a week ago.
- "Cannabis demand has surged in Florida," writes MKM Partners Research, which says operators saw an average jump in THC product of 36% for the week ending March 19.
As demand flourishes, long-suffering publicly traded cannabis companies have seen their shares start to rebound. Canopy Growth is down 70% in the last year, but over the last week shares are up 25%. Tilray has lost 90% of its value in the last year, but over the last week shares rose nearly 40%.
DeAngelo said Harborside is hiring drivers as delivery ramps up. Even though California calls cannabis essential medicine, he said customers do not need a medical card to buy. Anyone over 21 can make a legal purchase.
"Fortuitously — we didn't know the pandemic was coming — a few months ago we opened our Desert Hot Springs location," DeAngelo said. "We have one of two drive-through windows in the entire state of California, so it's a very popular place to buy cannabis in the Coachella Valley right now."
Business is not booming everywhere
Some industry players are seeing setbacks, like many other businesses.
Headset reports inventory is starting to build in Nevada, where it claims as much as 80% of the business in Clark County comes from tourists to Las Vegas, and most of Las Vegas is shut down. Massachusetts has forced its cannabis stores to close during the shutdown. Denver tried to do that but relented three hours later after public outrage.
This amazes Steven DeAngelo. "Many people rely on cannabis as a first line of defense for medical issues," he said.
DeAngelo believes the plant can help calm people during stressful times. "Most of all, if we don't allow people access to cannabis — which is relatively safe — they're quite likely going to start self-medicating with more dangerous substances."
One of the big concerns is whether cannabis businesses that have to close and send employees home will have to continue paying them under a new federal law, the Families First Coronavirus Response Act. The businesses may not qualify for federal aid in return, since marijuana remains federally illegal.
Wurk is a company that provides human resources and payroll services to 400 legal cannabis businesses, and it has been providing resources to help navigate the shutdown. Regarding the new Families First law, "Right now cannabis companies absolutely have to comply," said Wurk account manager Lauren Spagnuolo. "We don't know if they're going to be eligible for the tax breaks that are being offered as part of these programs."
Federal assistance unlikely
DeAngelo thinks it high unlikely the industry will receive any federal assistance, but "we, at this point, are not in need of that assistance."
Meantime, DeAngelo said his managers are working hard to make sure employees maintain social distancing both in the store and in their growing facilities. Most customers are taking curbside delivery.
"We have been encouraging all of our clients to consider non-inhaled forms of cannabis at this time," he said, given concerns about the virus. "If we're having a situation where we are all concerned about a respiratory illness, then it's probably a good idea to think about ingesting cannabis through some other method than the lungs."
Supply will not be an issue. "We could just keep on selling all of the cannabis that we grow on our own farm, and we will not run out of that, I promise."