The first impacts of the pandemic are now being felt on local businesses, education systems, and major public events around the world — and the cannabis industry will be no exception.
In this new three-part blog series from Prohibition Partners, our industry experts are offering their insights into how the outbreak of COVID-19 might affect the cannabis industry and its wider impact on patients and consumers.
Bad news for luxury brands?
To examine what might happen to the future of the cannabis industry, first, we must step back into the past.
The 2008 financial crisis, also known as the ‘Great Recession’, dramatically changed the global economic landscape – but it also fundamentally shifted consumer behaviour. There was a shift away from professional services, such as gym memberships and spending in hair salons, and towards more practical products, like home hair dyes and sewing kits, as consumers adopted a ‘do-it-yourself’ attitude. Similarly, consumers moved away from purchasing products at premium brand stores, and moved towards more discount retailers.
So what might this mean for the cannabis consumer and industry of today?
Social distancing measures and self-isolation have created a similar environment prioritising the bulk-buying of products deemed essential. Already, we are seeing the beginnings of cannabis consumers looking to bulk-buy their usual products from dispensaries, or turning to e-commerce and cannabis deliveries where these businesses have been affected by shutdowns. Additionally, consumers might pivot away from the cannabis brands which are perceived as high-end or more luxury, and towards cheaper product offerings.
Although, luxury cannabis brands may do well to remember the ‘lipstick effect’ — the phenomenon whereby consumers continue to spend money on small personal indulgences during economic uncertainty or personal times of struggle. With self-isolation and social distancing measures meaning that more time is spent indoors, recreational users of cannabis and CBD may well consider these cannabis products to be an ideal indulgence during these times.
The curious case of CBD
It is also possible that we could see an interesting variation in the sale and usage of CBD products as a result of the COVID-19 outbreak.
CBD has already been branded as a panacea within the health and wellness community, where the cannabinoid is touted as an effective treatment for anxiety, chronic pain, and other common medical conditions. Extensive scientific research has already been done investigating the compound e.g. for its antioxidant, anti-inflammatory, and analgesic properties, though there is no clinical evidence to suggest CBD could be helpful in explicitly treating symptoms of COVID-19. However, with the COVID-19 pandemic putting the healthcare sector under strain, those familiar with the compound may still seek to stock up on the therapeutic cannabinoid regardless.
What happens to CBD sales may well come down to the type of information that consumers are reading and engaging with — misinformation is already spreading within the CBD industry as to the effects (or lack thereof) CBD can have on COVID-like symptoms, and there is conflicting advice being released by national authorities and by the WHO as to the safety of taking anti-inflammatories to manage COVID-19 symptoms. To be clear, Prohibition Partners have seen no clinical evidence to suggest CBD could be helpful in explicitly treating symptoms of COVID-19.
What does the average cannabis consumer think?
Based on data gathered by Prohibition Partners (19 March 2020) in a survey of over 2,500 people in the United States, United Kingdom, and Canada, we anticipate that COVID-19 is unlikely to have a dramatic impact on personal cannabis or CBD consumption, though we would expect consumption to increase slightly.
When asked, “In the coming three months, what impact do you think the Coronavirus (COVID-19) will have on your use of cannabis, CBD, or products infused with CBD or hemp?”, most respondents reported that the virus would have no significant effect on their consumption habits.
However, respondents were three times more likely to report an intention to increase their usage of cannabis products than decrease usage in these times. For medical cannabis users, this likelihood rises to four-times as many.
(Graphed data reflects the responses of 2,172 people reporting the use of either medicinal cannabis, or recreational cannabis, or CBD, or cannabis-infused goods.
Excludes ‘Don’t Know’ and ‘N/A’ responses.)
Regionally, consumers in the United States were the most likely to say that they would consume more cannabis, CBD products, or infused consumer goods, in the short-term future.
Personal usage and consumer behaviour is just one cog in the complex machine of the cannabis industry. While consumers’ intent to use cannabis products may increase slightly in light of the spread of COVID-19, the effects of the virus could also affect the type of product offering that consumers are drawn to, and the normal operations of the cannabis industry could stand to be considerably impacted by regional shutdown measures brought in to control the spread of the virus.
Prohibition Partners’ experienced industry analysts will breakdown these other aspects of the industry in parts two and three of this series, linked below.
https://propartblogdv3.wpengine.com/2020/03/27/insight-the-coronavirus-pandemic-and-cannabis-consumer-behaviour-ii/
For more in-depth information and support, contact the Prohibition Partners consultancy team at info@prohibitionpartners.com.
