Marcus Richards
For nearly three months as of this writing, the COVID-19 pandemic has had a significant impact on the leisure and service industries due to social distancing and lockdown policies implemented by lawmakers as recommended by the World Health Organization (WHO). Related markets, such as the alcoholic beverages industry, are seeing sales plunge due to natural ripple effects from the closing down of pubs, taverns, and steakhouse across the nation.
But what about niche players in their nascent stages, such as the cannabis industry? In this post, we examine how cannabis’ popularity and impressive number of specialized markets have given the industry notable resilience during the COVID-19 onslaught on America’s economy.
Cannabis Beers: A Case in Point
Back in March, the cannabis industry saw record sales as customers stocked up on their favorite strains, edibles, and infused products in anticipation of COVID-related supply chain disruptions. CBD- and THC-imbued beers were certainly no exception. The health-promoting, stress-busting effects of cannabis brews have made them all the rage since Aurora, Colorado’s Dad & Dude Breweria introduced the public to infused beers in the Great American Beer Festival of 2015. Since then, cannabis beers — particularly CBD-infused ones — have drawn the attention of major brewers such as Molson Coors and Long Trail Brewery, along with a slew of celebrity endorsements to keep them on shopping lists across the country.
Currently, cannabis beers continue to outperform their more conventional counterparts in sales. This is likely due in part to the recent WHO advisory advising the avoidance of alcoholic beverages, citing their “deleterious effects on the immune system” and likelihood to “increase the risk, frequency, and severity of interpersonal violence in the home” throughout the COVID lockdown.
The non-alcoholic distinction of many cannabis beers aside, there’s no denying their popularity among consumers, who precipitated a surge in sales across the country in a bid to stock up for what is expected to be a long-term crisis. State lockdowns have also highlighted the adaptability of small business models, as so-called “craft brewers” have been able to seamlessly transition to contactless deliveries within their respective locales to maintain sales operations and relations with cannabis suppliers.
COVID-19 and Cannabis Stocks: The Good, The Bad & The Funky
Cannabis stocks and shares are certainly not exempt from the volatility of global markets and the subsequent impulses of jumpy investors on Wall Street. A good example of this is industry giant Aurora Cannabis (NYSE:ACB) which plummeted 12% on Tuesday, May 12th, only to go on to surge 17% two days later with a simple release of the cannabis producer’s third-quarter earnings.
As the COVID-19 pandemic continues, markets have hit a slump, and investors are assuming understandably defensive postures. This trend has caused even the most resilient cannabis stocks to freeze in their tracks, prompting a wait-and-see attitude from speculators who’ve grown accustomed to the overall bull trend of the so-called “green line.”
It’s worth noting that there are cannabis-related stocks that are among the few continuing to perform well during lockdown season. Here are three examples:
- Scotts Miracle-Gro (NYSE:SMG), a lawn and garden products company that has become the supplier of choice for hundreds of independent growers and small dispensaries across the country.
- GW Pharmaceuticals (NASDAQ:GWPH), the company behind the highly-acclaimed Dravet and Lennox-Gastaut syndrome drug Epidiolex, which is the first and only cannabis-based medication approved by the FDA as of this writing.
- Shopify (NYSE:SHOP), a tech platform for products and services between companies and individuals with sales up at an average of 47% year over year since its inception. Shopify’s platform is used by cannabis giants like Aurora Cannabis (NYSE:ACB) and Canopy Growth (NYC:CGC) to sell online.
Up-and-comer products such as terpene-infused beers from the UK have also drawn the attention of investors in recent months, lending to the cannabis industry’s remarkable resilience overall during the COVID-19 pandemic.
Friends on The Hill: Cannabis Advocacy & The Future
After being shut out of the Coronavirus Aid, Relief and Economic Security (CARES) Act, cannabis advocates on Capitol Hill quickly turned to individual states to propose aid packages. A string of subsequent defeats later, Democratic congressman Ed Perlmutter (D-CO) finally gained the support of House Leader Nancy Pelosi (D-CA) in backing banking access inclusion for the cannabis industry in the latest Congressional Coronavirus Relief Bill. The inclusion was announced Tuesday, May 12th, and was lauded by advocates, stakeholders, and lawmakers alike.
Given the cannabis industry enjoys the support of tenacious allies in America’s administrative center, the future of infused beers and products are hardly in question. While brewers currently have to stick to terpenes to produce completely legal beers, lawmakers on the Hill are continuing the fight to overturn cannabis’ Schedule I classification under the Controlled Substances Act. Given time, success, and the eventual end of the COVID-19 lockdowns, it won’t be long before the legal cannabis industry sees an explosion in its variety of CBD- and THC-infused beers, along with other infused products.
