Cannabis industry supply chain stalls amid the latest Omicron outbreak

Bethan Rose Jenkins, Cannabis News Writer/Editorial

The most recently discovered strain of coronavirus, the Omicron variant, is currently spreading across the globe. So intense is the outbreak that cannabis companies are struggling with supply constraints.

A wide range of essential materials such as steel construction beams, heating/cooling equipment and foreign-made packaging materials like vaporizer batteries and cartridges cannot be distributed from factories and ports due to Omicron disruptions.

Even in cases where certain ports and factories remain open, many are operating on limited capacity. A lack of available staff members means that cannabis producers and retailers are forced to seek out more costly suppliers.

Consequently, cannabis businesses are restrained in terms of what they can indulge their customers with. Additionally, building construction projects are being put on standby and outgoing expenses are skyrocketing.

That’s without even mentioning the fact that a growing number of workers are contracting Omicron, thus resulting in other staff members and executives giving up their precious time to manage company sales and review customer IDs.

Growers and manufacturers of cannabis products in the U.S. face the biggest hurdles

So far, the fast-moving Omicron variant is believed to be overwhelming U.S. hospitals at the rate of 2000 fatalities per day. What’s more, a report by the New York Times suggests that the country is reporting more than 700,000 daily cases of Omicron.

Of all the job types in the cannabis industry ranging from branding creation to laboratory testing growers and manufacturers appear to be struggling the most amid the Omicron outbreak.

Due to disruptions caused by this variant of coronavirus, logistics companies are plagued with staffing issues and container ships are clogged up in queues outside ports, thus making it difficult for cultivators and product manufacturers to get their hands on essential materials.

Congestion issues and unresolved shipping problems have resulted in a serious lack of aluminum cans required for cannabinoid-infused drinks; not to mention various other types of cannabis merchandise. 

So much so, as cannabis consumers seek out alternative substances, alcohol companies are experiencing an upward sales trend. This particular study by Columbia University Mailman School of Public Health researchers demonstrated an uptick in U.S. alcohol beverage sales during last year’s COVID-19 outbreak.

In a desperate response to the latest delays, cannabis companies are choosing to make bulk orders of aluminum cans from manufacturers who are only accepting mammoth-sized orders. For example, Theory Wellness recently bought one million cans in one go and even rented an independent warehouse to store the surplus inventory for future use.

Legalities make it harder for cannabis companies to thrive amid pandemic 

Although it’s not just cannabis businesses that are scrambling to adjust to the pandemic-related supply disruptions, the legal and regulatory difficulties that continue to disturb the weed industry make the prospect of thriving amid coronavirus all the more daunting.

Firstly, cannabis companies must abide by strict state health warning requirements in most states, e.g. label customization and childproofing. Adhering to specific requirements can make it tricky to find a new last-minute supplier.

Another hurdle that cannabis companies must overcome is financing. Since the terpene-rich plant is still illegal under federal law, many banks and financial institutions are reluctant to serve cannabis companies. That being so, operators are finding themselves draining their bank accounts and tackling packaging shortages to complete important tasks, such as construction projects. 

That is not to say that many state-legal cannabis markets aren’t still succeeding, however. According to a report published in the International Journal of Drug Policy, legal cannabis sales hit all-time highs in Alaska, Colorado, Oregon and Washington during mid-2020, at which point the coronavirus was spreading across the nation at lightning-fast speeds.

Nonetheless, executives predict ongoing supply chain disruptions throughout the month of February. Why? Chinese factory workers will likely visit their families after the country’s New Year holiday, which would result in further staffing shortages. Plus, there’s the added fear of new coronavirus variants transpiring and, as a result, exacerbating the supply chain’s existing problems.