Covid-19 Appears To Boost Cannabis Sales In Some StatesJune 9, 2020
Amid the economic damage inflicted by Covid-19, cannabis sales have largely bucked the downturn. Several states have seen huge gains that have proven more durable than expected. Counter to initial reports of a week of panic buying in mid-March followed by a return to regular business levels, recreational cannabis has seen sustained growth as large swaths of the U.S. population were under lockdown for the last twelve weeks.
In particular, cannabis sales in Oregon are currently the most dynamic they have been in years. Oregon was the third state to open its recreational market when it began sales in 2015, following Washington and Colorado. It has enjoyed steady growth in the years since but recently appeared to have reached a plateau.
In April 2019, Oregon’s cannabis sales totaled approximately $61 million. April 2020, by contrast, saw sales jump 45% to approximately $89 million, according to the Oregon Liquor Control Commission, making it the best-selling month in the state’s history. Yet that record was short-lived, as May saw sales surge another 15% consecutively to hit $103 million in total. In May, $91.5 million came from the recreational market while the other $11.5 million was in medical sales. Adding in approximately $86 million in sales in March, the three month period has produced $278 million in cannabis spending and put the state firmly on track to top last year’s annual total of $795 million.
The younger midwestern markets in Illinois and Michigan have also seen upticks in sales, though they have not been as dramatic as Oregon’s. Illinois had its second best month on record in April, raking in $37.2 million in recreational sales; that performance trailed only January, the market’s first month in operation, when initial excitement pushed sales to $39.2 million. Likewise, Michigan saw a bump in March to $30.4 million following a January and February that each sold $30 million. Oregon, Michigan, and Illinois all deemed dispensaries essential businesses and have allowed them to continue selling in some manner throughout the pandemic.
The world’s largest cannabis market—California—hasn’t been as fortunate. While complete sales data isn’t available, reference to tax totals and the state budget give an indication of the hardship cannabis businesses are feeling in the Golden State. Governor Newsom’s office recently released its revised annual budget, which cut $36 million in funding for education, environmental protection, and public safety because the funding came from cannabis taxation tax receipts, which are “lower than expected as a result of the Covid-19 pandemic,” according to the budget summary. For the first quarter of the year, total tax revenue reported by the cannabis industry was $134.9 million, according to the California Department of Tax and Fee Administration, down consecutively from $177.3 million in the fourth quarter of 2019.
The difference is attributable in part to California’s status as a cannabis tourism destination. While other states can and do sell to non-residents, California relies on tourists to a greater degree, with visitors accounting for up to 30% of sales, according to some estimates. Illinois, for comparison, also does significant out-of-state business, but it is still a much lower percentage of sales. For the $37.2 million Illinois sold in April, non-residents accounted for $7.5 million, or 20%.—Danny SullivanSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.
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