Coronavirus pandemic has swept across over 200 countries and its economic impact is felt in various sectors the cannabis industry included. The cannabis industry has been facing challenges in the past year but the COVID-19 pandemic has just turned it into a dumpster fire. Although the pandemic has affected supply chains the industry has benefitted from a surge in demand.
The medicinal use of cannabis makes its an essential business and in Canada, cannabis dispensaries have remained open. Medical marijuana is important for treating nausea, seizures and easing chronic pains and some patients during this coronavirus period might be looking at marijuana treatment relative to conventional treatments that they consider to be ineffective.
Cannabis retail stores in Ontario resort to online sales
Despite initially putting cannabis in the essential list, Ontario has announced that recreational cannabis is not part of the essential items. As announced by the government all non-essential items expected to shut as of April 4th to combat the spread of coronavirus. However, the pot stores have been allowed to open by taking online orders with curbside pickups and home deliveries. People are stocking cannabis as they anticipate that the lockdown could last more than the initial 14 days indicated.
Nevertheless, despite people receiving marijuana through delivery, this will have a major impact on demand if the number of coronavirus cases continues to grow. Therefore this will affects most of the cannabis companies in Ontario such as Hexo Corp (NYSE: HEXO) Canopy Growth (NYSE: CGC), Aurora Cannabis (NYSE: ACB) and Aphria (NYSE: APHA). One company that will be most hit is Canopy growth which in late 2019 opened another five Tokyo Smoke outlets in the province bringing its total to seven.
Ontario targeting 1,000 stores by the end of the year
However, all is not gloomy because after the coronavirus is defeated the industry could rebound with Ontario planning to license over 1,000 stores by the end of the year. Currently, there are 53 retail stores licensed to open with another 134 stores in the process of authorization while 72 have given notice of intention to open. But this number could vary because of the coronavirus situations.
Equally the launch of Cannabis 2.0 products could shore up sales for the companies. Most companies were banking on cannabis derivatives this year to boost their revenues and some had already launched their products ready for the market. For instance, Aurora Cannabis was already searching from a brand-name partner for the launch of its cannabis products such as vapes and edibles but could now experience a slowdown.
Supply chain disruptions are easing
Supply chain disruptions experienced by most licensed producers have started to improve. Before the lockdown companies were dealing with supply chain disruptions from China where the virus began. Most vaping accessories come from China and it is also the source of ventilation and lighting equipment important in cannabis cultivation.
The situation in China seems to have returned to normalcy. Most manufacturers and suppliers have resumed operations which is good news. The only impediment for producers is the current coronavirus situation.