Cannabis experienced a high during the pandemic
In the spring of 2020, the then-struggling cannabis industry freaked out. It seemed possible, even likely, that the industry would shut down along with large swaths of the rest of the economy. But, soon after governments across the country deemed weed an essential business, it became clear that the Covid-19 pandemic would not only not hurt the industry, but might actually turn out to be just the boost it needed—though the cost, horrendous levels of suffering and death, is one nobody wanted to pay.
Now that we seem to be emerging from the other end of the Covid tunnel, it’s looking more and more like that’s exactly what happened.
Demand for weed exploded in the early days of the pandemic, as people stocked up, both because they assumed they might soon not be able to get their weed in the event dispensaries were shut down, and because they were stuck at home. As the months rolled by, more people cited weed’s medicinal qualities as reasons for their purchases. In particular, many people obtained cannabis to relieve their stress. At the same time, more states legalized weed for either medical or recreational use, spurring further demand for the legal product.
It’s almost difficult to remember how rough things were looking for the industry in 2019 and early 2020, as companies faced challenges from strict government regulation and high taxes, and the continued federal illegality of pot, which crimps commerce in countless ways—restricted access to banking and the inability to move product across state lines being just two of them. At the same time, many companies became victim to their own bad, and sometimes idiotic, business decisions. Profligate spending by companies including MedMen, DionyMed Brands and others, along with slim profit margins throughout the industry, caused investors to rethink the weed market, sending stock prices over a cliff. There were layoffs and closures. Then the pandemic hit.
And sales soared. According to Leafly’s analysis of government data, consumers spent 71% more on legal weed in 2020 than they had in 2019, yielding total sales of more than $18 billion last year. Seven states have legalized adult-use cannabis since the end of 2019, bringing the total to 16, plus Washington, D.C., but that doesn’t explain the spikes in sales in states that were already legal, including California, where sales rose 57% in 2020, to $4.4 billion, according to MJBizDaily. There is general agreement that the pandemic was a major driver of sales increases across the country.
And it doesn’t appear that the market will cool off any time soon. New Frontier Data, a pot-market researcher, projects that the legal weed industry will grow to $41.5 billion by 2025, which would mean an annual growth rate between now and then of about 20%.
As cannabis becomes more culturally acceptable and legalization spreads across the nation, the trend will only continue, according to analysts. One report from New Frontier Data projects that the legal marijuana industry in the U.S. alone will swell to $41.5 billion by 2025, a compound annual growth rate of 21% from 2019.
A popular idea in the pot community is that there really is no “recreational” cannabis market: that it’s all “medical.” That is, people don’t use it the way they use alcohol recreationally—to party—but use it to feel better, whether that means relieving pain or just relieving stress. The way in which Covid has affected the market might bear this out. The big dispensary operator Verilife recently conducted a survey finding that 72% of respondents named Covid as their primary source of stress and burnout. Of those, 40% said they used cannabis to relieve those symptoms.
Meanwhile, the health researcher Veriheal, a medical-cannabis network that connects patients and doctors, reported that, according to its research, the pandemic changed the main demand drivers for medical weed: patients, the firm said, are “moving away from physical explanations and towards a feeling or mood-based concept.” That is, they’re buying weed to relieve stress and, as the survey put it, “feel happy.”