The coronavirus is still taking a toll on the cannabis industry, and this week the main question was how the disease might impact sales on the unofficial cannabis holiday 420.
Aside from that, Canada released its February cannabis sales data, and marijuana companies in the US continued to face roadblocks in accessing federal COVID-19 relief packages.
Read on for a closer look at some of the biggest cannabis news over the last five days.
Market watchers predict muted 420 buying
As mentioned, 420 came this past Monday (April 20) and industry participants are now waiting on sales data from sellers. While the marijuana-focused day normally brings a spike in buying, it remains to be seen how COVID-19 restrictions will impact purchasing by consumers.
According to cannabis data provider Headset, over the last five years daily sales on 420 have generally been 95 to 125 percent above normal levels. But prior to this year’s holiday, the firm predicted that the coronavirus would make 2020 a different story.
The company was calling for “substantially lower” 420 sales volumes this year, but said it expected sales to be boosted throughout the week. Headset also said it anticipated lower average discounts on the day, with retailers instead staggering price drops throughout the week to reduce lines and crowds.
“We’re running the sales over a five-day period instead of a one-day sale so we don’t have any lines and more importantly our employees are kept safe,” he said.
Headset was also calling for basket sizes to be higher during the week compared to previous 420s as more people choose pickup and delivery options instead of in-store purchases. In general, said the firm, pickup and delivery baskets are almost twice the size of in-store baskets.
Other cannabis players have also emphasized the idea that cannabis sales in the time surrounding 420 will be strong, even though the day itself may not be as big as usual.
“We joked that it would be 420 all month because it’s April 2020, but it came true,” Sally Vander Veer, co-founder and CEO of Denver-based Medicine Man, told Forbes. “If you look at sales day over day, the month of April is perhaps the most consistent and sustained bump in sales that we’ve ever seen.”
Big year-on-year increase for Canada’s February sales
Also this week, Statistics Canada released February data, reporting that cannabis sales came in at nearly C$150 million for the month. That’s down around 2.8 percent from January, but up significantly from a year ago, when sales were only about C$50 million.
Of Canada’s provinces and territories, Quebec experienced the largest month-on-month sales drop, with buying declining by close to 9 percent to just over C$29 million.
Chris Damas, editor of BCMI Cannabis Report, told Marijuana Business Daily that the decline seems to be mostly related to the fact that February is a short month. “The only explanation I can give for the decline of CA$2.4 million in Quebec sales was the shortened month and winter weather,” he commented.
According to Damas, it’s too soon to tell how Cannabis 2.0 products are impacting sales in Canada.
The products, which include edibles and vapes, were introduced in the country in December, but he said ordering has been tentative as stores don’t want to end up with large amounts of unsold inventory. In addition, there are only a few companies offering Cannabis 2.0 products — and they sold out quickly.
It’s also not yet possible to judge the impact of COVID-19 on cannabis sales in the country, although March numbers should begin to shed some light on the situation.
US cannabis companies still unable to access federal aid
Cannabis stores have been deemed essential in many parts of the US since coronavirus restrictions began to be implemented, and as time goes on market participants are beginning to wonder why marijuana companies can’t access government relief initiatives.
The answer is that cannabis is still illegal at the country level in the US, meaning that receiving federal funds isn’t in the cards. But despite that obstacle, some government officials are striving for change.
This week, 10 US senators wrote a letter calling for future COVID-19 relief packages to allow small state-legal cannabis and indirect cannabis businesses to access emergency loan and grant programs administered by the US Small Business Administration. The move follows a similar letter written earlier this month that was signed by more than 30 congressional members.
At the state level, California has taken steps to help cannabis companies, according to Marijuana Business Daily, allowing them to benefit from new guidelines geared at helping businesses survive during the coronavirus. Among other things, the state has extended state tax return filings and payments under US$1 million until July 31 of this year, and has granted relief from tax interest and penalties.
However, not everyone in the industry thinks the help is enough, with some pointing out that the measures don’t account for the downtrodden state of the cannabis space prior to COVID-19.
Cannabis company news
- Clever Leaves and a subsidiary of Canopy Growth (TSX:WEED,NYSE:CGC) have entered into a regional supply agreement. Under the one year deal, Clever Leaves will supply Canopy with extracted products from its cannabis processing system and cultivation sites in Colombia. Canopy announced last week that it would be halting operations at its own cultivation facility in the country.
- IM Cannabis (CSE:IMCC) announced a three year sales agreement between Focus Medical Herbs and Israel’s PharmYarok. The deal for 12,600 kilograms of IM Cannabis-branded medical cannabis is expected to bring IM Cannabis about $71.6 million in consolidated revenue starting in 2021.
- Indiva (TSXV:NDVA,OTCQX:NDVAF) released its preliminary results for the latest quarter, saying that net sales are expected to come in at $2 million to $2.2 million, up from $0.3 million in the previous period. According to the company, its Bhang milk and dark chocolate, part of its Cannabis 2.0 rollout, are the top two sellers at the Ontario Cannabis store.
- Khiron Life Sciences (TSXV:KHRN,OTCQX:KHRNF) entered a sales and distribution deal with Locatel, a Colombian pharmacy, healthcare products and medical equipment retailer. Khiron is the only company with the permits and certificates needed to sell medical cannabis in the country.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Khiron Life Sciences is a client of the Investing News Network. This article is not paid-for content.