Increased cannabis consumption amidst the COVID-19 pandemic pushed adult-use cannabis sales in mature markets to record highs this summer, but the latest data shows sales returning to more normal levels.
It’s yet another reminder that the nascent cannabis industry is in unchartered waters.
To date, the pandemic has boosted cannabis sales in most medical and adult-use markets, but that does not mean the industry will continue to benefit in perpetuity.
From June through August of 2020, adult-use cannabis sales in Colorado, Oregon and Washington state significantly outperformed sales during the same period in 2019.
In Washington state, for example, summer cannabis sales were up approximately 10% from the year prior in both 2018 and 2019. In 2020, however, that year-over-year sales increase ballooned to nearly 32%. That translates into an additional $62 million in sales during the summer of 2020 that could potentially be attributed to the coronavirus pandemic.
Though not as dramatic, both Colorado and Oregon also saw summer adult-use sales climb to levels higher than would be expected under normal circumstances.
But data from August 2020 suggests the COVID-19 sales bump may be diminishing. Colorado and Oregon saw sales increases of 25% and 31% over August 2019, respectively, which is roughly the same amount that sales grew in August 2019 over August 2018.
August 2020 adult-use cannabis sales in Washington state remained at elevated levels, though they also showed signs of softening.
According to a report from the National Retail Federation, decelerating sales growth – which is exactly what each of these adult-use cannabis markets is experiencing – is also playing out in the broader retail landscape.
It could be a sign that there is a limit to the counter-cyclical nature of the cannabis industry.
Counter-cyclical industries tend to do well during an economic downturn, and so far, that is precisely what has occurred in the cannabis space.
The coming months will be key to understanding how cannabis sales perform amidst long periods of economic turmoil and uncertainty – especially in the absence of an additional federal stimulus package. While it appears unlikely that sales will fall below their pre-pandemic levels, we may be returning to some degree of normalcy.