The world has been facing an unprecedented public health crisis since China declared that it had found the novel coronavirus earlier this year. Many industries have suffered from the new virus. Cannabis is no exception.
The global cannabis industry is experiencing a significant impact from COVID-19, a severe respiratory disease caused by the novel coronavirus. Major hemp producers, including China and the United States, have halted some of their production after the pandemic outbreak.
Since January, when Wuhan first detected the novel coronavirus, China has taken stringent measures to curb the further spread of the virus at home. Factories and ports in most parts of the country closed or partially closed. It resulted in the suspension of cannabis production and export.
Two or three months later, China basically contained the novel coronavirus and reopened part of its economy. But now its former export channels are unavailable.
In the United States, China’s biggest export destination, the novel coronavirus has killed more than 81,000 people and infected nearly 1.4 million others as of press time. Many companies, including cannabis entities, conducted massive layoffs and staff quarantine for fear of the further spread of the deadly virus.
In fact, about 94% of Fortune 1000 companies are suffering from shocks to their supply chain due to the novel coronavirus outbreak, according to the Dunn & Bradstreet.
Total nonfarm payroll employment fell by 20.5 million in April, and the unemployment rate rose to 14.7%, the United States Bureau of Labor Statistics reported on May 8.
Growing Demand and Cannabis Shortage
People have grown hemp on the earth for thousands of years. Many countries use this plant to make textiles, oil, and even medicine.
In Canada and 11 states of the United States, using cannabis products is legal. After interviewing scores of individuals, VapeBiz learned that an increasing number of American people have used drugs for recreational purposes in the past few months.
Sales are up 20-25% at all locations in the United States, CNBC quoted Steven DeAngelo, the so-called “father of the legal cannabis industry,” as saying.
Thanks to the growing demands, American cannabis companies have seen record-breaking numbers of orders and higher-than-average total purchase price per customer during the coronavirus outbreak, according to the Business Insider.
Cannabis shortage and price rise will be likely to emerge as “stay-at-home” orders remain effective in many parts of the United States. For this reason, American cultivators have started to stock up cannabis.
Besides workforce shortage, material shortage, from packaging materials to vaporizer components to personal protective equipment, is another cause of the broken global cannabis supply chain. Due to border restrictions and unavailable logistics, many of these essential goods, mainly produced by China, fail to reach the United States.
As the novel coronavirus continues to infect more civilians, lots of significant trade shows for the cannabis industry, which are going to take place in the United States, Canada, and Europe, have all been canceled.
While some businesses were enjoying record stock prices and boom times, cannabis stocks have been in a bear market, going down more than 75% in relation to early 2019, according to the Forbes.
Some experts claimed that the cannabis industry may still experience steady demand, though sales of some specific products such as edibles and drinks might be up to 30% higher had COVID-19 not happened.
The novel coronavirus has put the world into a state of uncertainty. It will hurt the global economy, including the cannabis industry. The exact price is yet unknown, but must be hefty.