The cannabis industry is considered one of the fastest growing industries in the United States and has seen a recent development of new facilities and an expansion of state programs. However, many companies with plans to build new facilities or apply for a license this year have had to put their plans on hold due to the Coronavirus.
Investors have pulled or delayed funds to open new facilities and facilities currently in operation have had to change their operating procedures temporarily. States are having to prioritize what is important right now, which for some, is not voting on the legalization of recreational or medicinal cannabis or expanding existing programs.
Is cannabis access likely to expand?
In Missouri, a campaign for legalizing recreational marijuana is likely over, at least for the time being. The campaign is still short by over 100,000 signatures from the 170,000 signatures required to put recreational cannabis to a vote on the November ballot. Even though the campaign is requesting the state extend the May 3rd deadline and searching for other alternatives, it is likely the campaign will be unsuccessful.
Some believe that states that have not already, will now consider legalizing medicinal or recreational cannabis in hope of helping the struggling economy. Since cannabis has assisted states by increasing the number of jobs and increasing cash flow, this may be an option that states seek post COVID. A study by New Frontier Data also states that by “recognizing fully legal cannabis at a federal level, it could create 1.6 million jobs and contribute $128.8 billion to federal tax coffers.”
Will money be invested into the cannabis industry?
Entrepreneurs in Illinois have been gathering what they can to pay the nonrefundable cannabis application fee, which is currently $2,500 per license. For many, they have recently experienced a decrease in income or even lost their jobs due to the virus, making it difficult to invest in anything with such uncertainty ahead.
Since federally chartered banks and small business loan programs are often not an option for cannabis businesses, investing in the industry is even more difficult. Even if a license is won, the cost to build a facility may prevent or delay openings due to the high price tag of a buildout.
Chicago applicants for craft growers must prove that they are approved for zoning within their municipality. Since many governmental offices are closed, applicants are unable to complete the necessary documents or get the documents notarized in order to move forward with their project. Luckily, Illinois legalized cannabis in January of this year and this helped the state produce nearly $40 million in recreational marijuana during their first month of sales.
Delays due to coronavirus: opportunity or loss?
Since many states enacted a stay-at-home order in which cannabis businesses were deemed essential, businesses are doing what they can to accommodate ensure safety. Some dispensaries have begun taking reservations for specific time periods to shop or are taking orders over the phone and online to limit the number of customers in the dispensary at a time. Despite increased safety measures, many states have seen an increase in cannabis sales. It is possible that sales benefited from some states’ loosened delivery restrictions or allowance of increased purchase quantities.
However, some cannabis businesses are being closed in states where they are not considered essential businesses. Many cities, like Chicago are preventing openings of new dispensaries due to the lack of availability of staff in particular departments. This will likely set many companies back, not only with openings, but funding as well.
As COVID-19 continues to impact day-to-day life, it is possible that more application delays or changes in licensing requirements may occur. It’s important for companies to stay informed on any local, state, or federal updates or changes and continue to do their part to ensure a safe environment for their employees and purchasers.