Research: How COVID-19 Is Affecting Cannabis Retail

Many consumers are stockpiling cannabis, signaling a boom for the industry, according to consumer research from Brightfield Group.

April 14, 2020

COVID-19 is scrambling supply chains and route-to-market options, forcing notoriously slow governmental cannabis offices to respond much more rapidly than we have ever seen.

Many dispensaries are implementing social distancing measures, such as offering curbside pickup (where possible), limiting the number of customers in the store at a time, and encouraging or mandating online ordering or delivery.

This is a strange time, and in some ways an opportunity to right many inefficiencies within the market by swiftly addressing issues and challenges. Governments have shown they can and will respond with solutions if driven by a crisis.

Products that can produce intoxicating effects are mostly insulated from market shocks in terms of demand, and we will likely see consumers continuing to turn to cannabis to handle anxiety or to combat sleeplessness.

With so many new-to-cannabis consumers transitioning to regular use, demand seems poised to skyrocket. Brightfield estimates show cannabis newcomers often graduate to “heavy users” after two years of use. Heavy use from these consumers is the growth vector that will scale new markets and make established markets more robust.

Most stores Brightfield Group contacted between March 2-5 reported sales up across formats, generally in line with typical sales. Some reported customers stockpiling cartridges, concentrates, edibles and other packaged products. Stockpiling of flower where market prices and supply allowed were reported by retail managers in all states. One Oregon retailer told Brightfield: “Almost everyone is buying an ounce.” Of consumers Brightfield surveyed, 52% reported they already stocked up or are planning to stock up on cannabis, while 28% said they planned on reducing their spending on cannabis.

Meanwhile, dispensaries in Canada have implemented next-day or same-day delivery in some places through their online stores. Current circumstances would call for a reversal of the channel trends we have seen; online sales plummeted from more than 40% of the market at the beginning of 2019 to less than 7% by the end of the year. 2020 may look different.

As for CBD

Of consumers surveyed by Brightfield, 48% have stocked up or plan to stock up on CBD, and 39% of consumers plan to use CBD more frequently. Only 23% of CBD consumers said they plan on reducing their spending on CBD.

Younger consumers are more likely to plan to increase their CBD usage, as nearly half (47%) of Gen Z and Millennial CBD consumers plan to use more frequently, compared to only 37% of Gen-Xers and 27% of Boomers.

Andy Seeger is the cannabis research manager for Brightfield Group, where he performs quantitative and qualitative analyses of the U.S. medical and adult-use markets.