Cannabis sales were soaring in March, especially during the first half the month because the coronavirus became a worldwide pandemic. Washington state saw a 9% increase in March's revenue from Cannabis compared to the prior year. California's sales were up 53% year over year (although in previous months, its rate of growth was around 75%). Oregon posted a record monthly revenue of $84.5 million, up from $61.2 million a year ago.
Cannabis sales were soaring from auto-flowering breeds to white widow feminized strains, but they were also slightly inconsistent. A California-based cannabis cultivator recently surveyed marijuana users across the country and located three key reasons demand was up in March. Let us take a glance at the factors driving increased cannabis sales to ascertain if this is often a trend that will continue and what it tells us about investing in cannabis stocks today.
Cannabis as An Outlet For Boredom During Community Quarantine
One of the more surprising responses from a survey was that quite 37% of individuals indicated they were consuming pot to alleviate boredom. This wasn't a result of the 2017 New Frontier Data survey, so it'd be a result of people in isolation thanks to the pandemic and are trying to find ways to pass the time once they can't set about their regular social lives.
Cannabis Is Good Handling Stress And Anxiety
Using weed to affect stress isn't uncommon. 40% of marijuana users said they were using more pot during the pandemic, and 74% said stress and anxiety were the most reasons for their current cannabis use. With news stations running alarming headlines around the coronavirus pandemic and consumers worried pot supplies might become scarce, it isn't hard to ascertain why anxiety and stress levels are high.
New Frontier Data conducted an identical survey in 2017 that found relaxation was the most reason (55%) people turned to Cannabis. However, stress and anxiety did not rank far behind, coming in at 40% and 39%, respectively. However, it does suggest that relaxing or relieving stress or anxiety remains the critical reason for cannabis use. Moreover, with stress levels higher because of the pandemic, it certainly is sensible that folks are consuming more Cannabis immediately.
Consumers Are Concerned A Few Cannabis Shortage
The main concern among those surveyed is that the fear of a cannabis shortage because of the pandemic. A complete 35% of respondents said this was the foremost pressing issue for them. Point-of-sale data from Headset, which tracks recreational cannabis sales for multiple states, corroborates these findings. Mid-March is when consumers were stockpiling their supply of Cannabis—just days after the WHO declared the epidemic. Cannabis sales from marijuana seeds to other derived products surged in California, Washington, and Colorado before falling within the following weeks.
What Impact Might Affect the Cannabis Industry?
The issue has been a political pandemic for a few months, and therefore the one thing investors shouldn't do is read an excessive amount into short-term trends. The sales data and, therefore, the survey results suggest some changes in buying patterns, with consumers making significant purchases more sporadically. However, that would change as consumers affect job losses and financial challenges that lie ahead.
What to Expect?
With the minimal mention of the pandemic and no word on a forecast for the third quarter, it appears the industry isn't sure what to expect. That is no surprise given how volatile sales are within the past month.
Investors should have a far better idea of how the pandemic might impact the industry's sales as well as the economy. Consumers will have begun to adapt to job losses and lockdowns. Then investors will start to ascertain just how high priority cannabis remains. Harvest Health's first-quarter results will likely still look sharp, but the vital interrogation point is how the second quarter of 2020 will play out.
There are many question marks within the cannabis industry immediately, which makes it a wrong time to take a position in pot stocks. Cannabis investors might want to carry out a minimum of another month to ascertain how the sales look and whether the demand for Cannabis is able to face up to the economy's current headwinds.