Cannabis Sales in U.S. have Declined Since the Pandemic Surge

(CTN News) – The U.S. cannabis sector is exhibiting indications of a decline as it deals with economic and legal hurdles, and consumers prefer to spend their money elsewhere after seeing a sales boost during the epidemic.

According to research from cannabis analytics company Headset, sales at retail stores and dispensaries in states with established cannabis markets, including Oregon and Washington, have decreased from a year ago.

Sales in Colorado, one of the most established markets in the nation, decreased 11.4% from a year earlier in June.

In some of the most mature legal cannabis markets across the U.S., sales are declining after surging earlier in the pandemic.

According to Chris Wash, CEO of cannabis Business Daily, “what we witnessed in 2020 was a tremendous jump in sales connected to the epidemic as people remained home, had government stimulus money, and not much to do.”

According to Headset, Colorado’s average monthly year-over-year sales increased by 25.8% between March 2020 and March 2021.

However, the survey revealed that both the frequency of cannabis sales and the number of money individuals spent started to decline as the epidemic started to ease last summer.

For instance, in July, customers paid $55.21 per visit to the typical Colorado business on average. According to Headset research, it was around $4 less than the average of $59.73 in July 2021.

Retailers are offering discounts during high inflation to take inventory off the shelves, according to Wash, who also noted that firms face fierce competition from a “thriving” underground sector that is not subject to taxes.

According to Troy Datcher, CEO of The Parent Company, a cannabis business in California, “we operate in a highly hard and competitive marketplace, with the illegal market being our largest rival.”

The industry’s overall retail sales are still expected to increase as new, sizable markets, including New York, Maryland, and Missouri, come online.

By year’s end, combined sales of cannabis in the United States for medical and recreational purposes could reach $33 billion, up from $27 billion in 2017. This estimate comes from Marijuana Business Daily. By 2026, sales are anticipated to reach $52.6 billion.

The long-term vista is bright, according to Wash. “This is basically what businesses experience.”

However, investment capital is now running out as the industry becomes increasingly saturated.

The amount of money invested in U.S. cannabis this year is down 62.6% from last year, and equity financing is down 96.3%, from $2.1 billion to $78 million at the moment, according to Viridian Capital Advisors, a New York-based cannabis consultancy business.

Experts said that investors’ fatigue with waiting for federal regulation contributes to the issue.

Cannabis firms in jurisdictions where permitted recreational sales still lack access to standard banking services and institutional funding due to a lack of federal regulation.

Such limitations would be lifted by a federal law known as the Secure and Fair Enforcement Banking Act (SAFE), which has passed the House many times but hasn’t been approved by the Senate.

According to Matt Hawkins, head of the cannabis investment company Entourage Effect Capital, “a lot of investors had stepped in with the premise that there would be some activity at the federal level to either reschedule the substance or establish a type of banking law.”

Hawkins said that he and other investors have grown picky about the companies they support, giving preference to those with a sizable market share.

Smaller players trying to establish themselves may wind up suffering. As a result, he warned.

According to Robert Beasley, CEO of Fluent, which runs medical dispensaries in Florida, Pennsylvania, and Texas, “the business is in an internal consolidation situation, with the new licensees finding it difficult to secure funding and grow with efficiency.”

Despite the economic challenges, Beasley expressed optimism that “a few tiny measures of regulatory relief” may assist in reviving the sector.

Related CTN News:

Heavy Rain and Flash flood Warnings Issued in Southern Thailand