Despite CBD’s role in strengthening the immune system, sales have decreased since the outbreak of COVID-19 began earlier in 2020.
As the virus spread from its origins in Wuhan, China, so did the panicked response from governments. Without reliable data on how infectious or deadly the virus was at the time, the only responsible measure was to shutter all “non-essential” businesses – sectors the economy not though to be vital such as agriculture and medical facilities.
The rules for medical marijuana dispensaries, where many people purchase high-grade CBD, were murky from the outset of the pandemic. Some jurisdictions labeled dispensaries “essential” and others considered them “non-essential.” Following a public outcry, nearly all states with legal marijuana are now allowed to operate.
The economic devastation that ensued from a deadlocked economy was predictable. CBD, which had been on pace to become a $24 billion industry was hit hard.
The CBD Damage Report
Following the nationwide shutdown orders in March, nervous hemp growers, CBD processors, and retailers could only wait to see the hit to their bottom lines.
On the heels of the latest economic reports, we now have a clearer understanding of how the pandemic affected the CBD industry economically, and what we might expect moving forward.
Some industry analysts had predicted a CBD boom as the pandemic broke out in what they called a “halo effect” – meaning that CBD would become a more attractive commodity to consumers who were interested in fortifying their immune systems due to the public health scare. Despite CBD’s legitimate role as an immune system booster via its activity on the human endocannabinoid system, the industry appears to not have benefited from the halo effect as many had hoped.
Other natural health supplements have experienced an apparent boost in sales because of the coronavirus, but CBD has not.
The initial hope of increased revenue during the crisis was founded on examples from industry leaders like Scott Riefle of SoRSE Technology, who reported 50% increases in sales between February and March of 2020.
Unfortunately, the individual examples of temporarily thriving businesses never panned out into an economy-wide trend, leaving many CBD proprietors angst-ridden about their financial futures.
New Trends in Consumer Habits
In one methodical examination of the cannabis market, the research firm Headset noted that, while smokable and vape-able forms of cannabis had decreased, edible products and beverages, infused with THC or CBD, had actually seen growth in sales, up 28% as of April.
The transition away from smoking/vaping as the preferred method of consumption in favor eating/drinking is indicative of consumers’ worries over the detrimental effects of smoking on the respiratory system, the primary point of attack for the COVID-19 virus.
The Economic Future of CBD
Estimates by government officials concerning when businesses will be allowed to re-open are fluid, changing as circumstances on the ground change. The latest figures predict that the outbreak has not yet peaked in terms of total infected. Numbers of deaths and infections are expected to climb for at least the next few weeks, necessitating potentially several more months of economic shutdown.
However gloomy the near and mid-term economic outlook might be for CBD, the industry will recover in the long-term. After reigniting the economic engines, CBD will reclaim its position as one of the fastest-growing sectors of the economy in the US and abroad.