Oregon’s cannabis industry can’t seem to catch a break.
If it’s not oversupply sending prices plummeting and putting farms and retailers out of business, then it’s vaping products suddenly and mysteriously incinerating users’ lungs. Now, it’s a global pandemic ravaging the economy and taking disposable income out of its customers’ wallets.
While March broke cannabis sales records in Oregon, leaping 37 percent from the same time last year, those numbers are already sliding downward, according to dispensary owners, as their main customer base—namely, service industry workers—face mass unemployment.
“It was like our 4/20 holiday came a month early,” says Tyson Hawarth, owner of Oregon’s Finest, which has stores in Northeast Portland and the Pearl District. “It seemed like there was a bunch of panic buying right up until the Stay Home, Save Lives order. And then, as soon as that officially took place, we saw sales take a nosedive. Since then it’s been very, very slow.”
Sure, Gov. Kate Brown has deemed cannabis an “essential business,” allowing shops to stay open. But with the pot industry specifically ineligible for loan assistance from the federal government, the already thin margins many dispensaries and growers operate on are getting slimmer.
In the long term, however, there are reasons for cautious optimism. In fact, according to some observers, the pandemic could end up being a boon for cannabis, particularly on a national level.
To get a sense of where coronavirus is pushing the cannabis industry, WW spoke to several Portland experts: Adam Smith, director of the Craft Cannabis Alliance; Amy Margolis, lawyer and founder of the Oregon Cannabis Association; and economist Beau Whitney, formerly of New Frontier Data.
WW: What does it mean in the long term to have so many states deem cannabis an “essential” business?
Beau Whitney: It benefits the industry in an environment where there’s already nationally 65 percent support for cannabis legalization in some form. By saying this is an essential business, and then by highlighting that fact, the general public becomes more and more comfortable with the concept of having legal access to cannabis products.
Amy Margolis: Just hearing over and over that cannabis is essential is going to have a federal impact. A lot of these state legalization initiatives are not going to make the ballot because they can’t get the signatures under the circumstances, so I think a lot of attention and energy is going to be shifted to federal work. I think a silver lining is going to be that we might have a lot of energy and resources directed at 280E [the federal tax code barring cannabis businesses from taking deductions or credits], federal legalization, veterans research—those kinds of things that are broadly important.
Adam Smith: This is a moment when everything is on the table. Everything is changing in some way. I think that this is going to impact cannabis, and the first step is the governor calling it essential. It was an admission of reality. So now it is a question of accommodation. How do we accommodate the new reality, and how is the new reality going to create more frictionless ways for the economy to operate?
March was the biggest month ever for cannabis sales in Oregon. Is there any indication of who was buying all that weed?
Smith: I don’t have numbers, but I’ve heard four different dispensaries in the last month who have said to me some version of, “I had this old lady came in who said she hadn’t smoked in 30 years.” I think people are looking at like, “What am I going to do for the next three weeks at home?” Especially if you lost a job or you’re working from home at some level.
Margolis: I speculate that it’s people stocking up the same way I went and bought 27 boxes of Cheerios.
Whitney: We’re seeing this across the country. Consumers were reacting to shelter in place with their grocery shopping or their alcohol shopping, and they did the same thing with cannabis. They reacted to the uncertainty by buying. I don’t think it was any different than buying rice or beans—maybe a little bit different than TP.
Will these people remain regular consumers once this is over?
Smith: Again, this is all non-scientific, but like anything else, when people get back to work, they will have less time and do mindless recreational things less. But this is a unique time. It may be a time of expanding the base a little bit, and those behaviors may change, but I think they’re sort of elastic with life situations.
Margolis: Even though I want to think cannabis is recession-proof, I had someone ask the question: If people don’t have jobs and they can’t get any assistance, are they going to spend money they don’t have on the weed? And I think that remains to be seen. Under the circumstances, in a recession, that looks very different than what we’ve seen before, where millions and millions and millions of people are immediately out of work, how do we spend our discretionary money, if there even is any discretionary money? We’ll have to look and see what happens in April and May if people stay on lockdown as they file for unemployment. If there’s no money, there’s just no money to buy weed.