28 May Corona-Cannabis Update #13: Sales Remain Strong, CBD Stocks Get COVID Bump

Greetings fellow admirers of the power of Madre Natura. We are here with the lucky 13th installment of our blog series focused on the impact that COVID-19 has had on the cannabis and hemp industries. Many are showing fatigue and frustration with the length of the lockdowns most of us have faced, others are begging us to hang in there to avoid a second wave. I think the smartest advice seems the simplest: try your best to socially distance other than with those in your household, and when you are in public near humans please wear a mask. Simple? One would think. #notapoliticalstatement. Here’s what’s happening in our world this past week:

• Sales stay strong. The “essential” cannabis business continues its sales strength in the US during the pandemic. Oregon, for example, just reported record sales in April, with officials noting that both price increases and growth in demand are responsible. Florida also is continuing with strong sales.
• CBD stocks get COVID bump. While it has been mostly fake news, there is at least one legitimate report of a Canadian experiment suggesting that certain CBD strains (not yet available) may impair COVID-19’s receptors and become a possible treatment for the virus at some point. This very preliminary news sent some CBD stocks way up.
• Cuomo determined. Last Friday, in his popular daily pandemic press conference, Governor Cuomo (D-NY) noted he is still determined to approve legalization of the adult use of cannabis in the Empire State, the nation’s fourth largest, “in the near future.” The pandemic interfered with the legislature’s ability to pass a bill during its budget process, but Cuomo’s comment led to a rally in cannabis stocks. A number of key legislators have recently been pushing to finalize a bill now to raise taxes and create jobs.
• Cultivators facing challenges. A new report notes that, even while stores remain open, cannabis growers are facing real challenges in obtaining equipment, supplies and workers they need during their key growing season. Some workers stay away out of fear, some equipment suppliers have shut down, and growers have had to buy masks and gloves for the team.
• Deals quirky. In one deal, a major multistate operator acquired an option to buy four Ohio dispensaries. A large Canadian operator this week announced it is closing a large cultivation facility. A small handful of public companies have just raised some money, including one raising C$57 million.  According to the well-respected Viridian’s Cannabis Deal Tracker, 78% of all capital raises in 2020 were completed by public companies.

So here we are. The industry continues its pandemic resistance in terms of sales, which is of course a relief compared to so many industries decimated by shutdowns. But as we see it is not so simple for the growers, whose supply chains have been hammered. Hang in there gang. Will CBD strains create a coronavirus treatment? The very clear answer: maybe, someday. Will New York approve adult use cannabis? The very clear answer: yes, but not exactly sure when. Are financings beginning to strengthen in the industry? The very clear answer: this is not yet clear. The stock market is recovering, however, for a variety of reasons, and that makes money raising a bit easier. I can tell you this: we are much busier in the last month assisting our cannabis clients with a variety of projects and, yes, some money raising. Hang in there gang (worth saying twice)!

Post-pandemic tip of the week: The way we interact with each other just may change semi-permanently. Some are saying basic actions like shaking hands, hugging, and sharing food and drink will become a thing of the past. This also presumably means no more passing the joint (or vape) around. This challenge could be good for sales if you are gathering with your friends (after all this mess) and everyone needs to have their own vape or joint, especially since some don’t really like to smoke a complete pre-roll. Maybe the smaller pre-rolls will become more popular as a result. See you next week as we move into June (it is June right?).