COVID-19 store closures are costing Massachusetts cannabis retailers millions in daily losses

Bethan Rose Jenkins, Cannabis News Writer/Editorial

For recreational cannabis dispensary owners in Massachusetts, the likelihood of raking in a healthy sales profit in 2020 is getting dimmer by the day. Why? On March 25, Governor Charlie Baker ordered statewide store closures as a preventative measure amid the coronavirus (COVID-19) health pandemic.

The primary goal of shutting down recreational cannabis stores in Massachusetts is to limit social contact and reduce the chances of more people becoming infected with the contagious virus, which has affected over 50,000 people in the state so far. However, some other adult-use cannabis markets in the United States have been allowed to continue operating; many cannabis businesses have even been considered “essential”.

Unfortunately, the emergency shuttering of adult-use cannabis stores in Massachusetts means that non-registered medical cannabis patients may have no choice but to pay money for enrollment in the state’s program. Furthermore, store closures are putting a dent in dispensary income; cannabis sales plummeted soon after Gov. Baker issued emergency store closures, based on data published by the Massachusetts Cannabis Control Commission (CCC).

What’s more, the CCC recently dropped a bomb that closures could already be costing the industry a whopping $40 million. Since that estimate was drawn up in mid-April, the total eventual economic damage is likely to be even more devastating.

Massachusetts’ cannabis sales nosedived following Governor’s emergency order

According to sales data from the CCC, weekly sales averaged $12.6 million – equivalent to $1.8 million daily – between December 30, 2019 and March 8, 2020. Sales started to spike on March 11, with sales averaging at  $15.5 million over the next fortnight. These figures represent 19 percent growth over the December-March 8 average. Then, in an unexpected turn of events, recreational cannabis dispensaries and related businesses were ordered to lock their doors, leading to a slump in revenue from March 24 onwards.

Not only were customers turned away from brick-and-mortar stores to minimize spreading of the virus but also, because of Massachusetts’ close proximity to various other New England states; out-of-stater’s may be enticed by the opportunity to purchase legal buds. Additionally, the large population of Massachusetts – approximately seven million – was a contributing factor in Gov. Baker’s decision to force-shut adult-use cannabis businesses.

As a direct effect of emergency store closures, cannabis businesses – and the economy – are missing out on as much as $2 million for every single day that the COVID-19 pandemic lingers. While recreational cannabis business owners in Massachusetts might be hard done-by amid the coronavirus outbreak, numerous U.S. states like Alaska, Arizona, California and Colorado have been permitted to continue serving customers.

Cannabis businesses in Massachusetts should be money-wise amid COVID-19

This year’s cannabis sales in Massachusetts may not transpire as analysts initially predicted. Estimates from industry experts at Marijuana Business Daily pinned a valuation of $575 million to $700 million on the state’s adult-use cannabis retail sector for 2020. However, analysts were unaware of the fact that COVID-19 would be ripping through the world this year.

On the plus side, there’s a chance that recreational cannabis business owners in Massachusetts will be cut some slack, what with a group of adult-use entrepreneurs recently filing a lawsuit against Gov. Baker for depriving non-registered medical cannabis patients of their medicine. The plaintiffs want a reversal of Baker’s executive order, which is expected to keep recreational businesses closed until May 4.

In the meantime, officials from the CCC recommend that – during their absence from the adult-use sector – cannabis business owners pay attention to their cash flow. Costs and revenue should be optimized, say officials, who also suggest strengthening communication with business partners and customers; as a means of maintaining relationships throughout and beyond the pandemic.