28 Feb The Coronavirus Might Cripple the Cannabis Industry
Everyone is up in arms right now about the Coronavirus. As they should be. It is not only harming the people it infects but business is starting to take a blow from this outbreak. Truth is the coronavirus is a threat to the cannabis industry as well. It isn’t just going to slow down the manufacturing of Chinese vape cartridges and plastic packaging that is coming from Asian countries. It isn’t just going to make a bunch of people violently ill. The coronavirus has already starting to hurt our economy and has the potential to infect whole industries.
A Struggling Cannabis Industry
Truth is the cannabis industry is in a weird place right now. The CBD market is now extremely saturated, from retail all the way to manufacturing. The investor green rush is also starting to die. With the market being over saturated and “big cannabis” now controlling a number of markets, investors are no longer as eager to enter the cannabis industry now.
Some of the so called “big cannabis” companies are starting to lay off employees. Even companies in the ancillary markets have started to lay off their employees. People who left their non-cannabis jobs to enter the industry like programmers, HR, and accountants are now moving back to non-cannabis related jobs.
The concern is with the markets over saturation and the inability to find proper funding, what happens if all these layoffs turn into a recession? If the entire cannabis industry takes a significant dip, there are going to be many small companies that aren’t going to last very long!
Cannabis and the Coronavirus
Here comes the coronavirus!
We aren’t going to sit here and contemplate the possibility of the coronavirus ushering in a zombie apocalypse. But we are going to acknowledge that the fear of the coronavirus has already hit the US economy and it hit us pretty hard. The stock market has taken a dip due to fears of the coronavirus. It has dropped over 2,200 points!
This fact is significant to the cannabis industry because it has already become difficult for the cannabis industry to find funding, what is going to happen when those who normally do the funding have no money?
Hightimes recently got approval to be traded in the stock market! Is this a good time to enter the stock market? Weedmaps and Leafly have recently laid off 20% of their employees. Massroots has just burned through $20 million and their stock is at $.003 a share and their website was taken down yet again. Last fall their website was down for 9 whole weeks, are they going to get it back up quickly this time?
Bear in mind! All the above events happened when the stock market was doing well! Currently interests rates are at an all time low for mortgages and home and car loans. These are signs that we are on the brink of a recession! Are the above companies going to be able to survive?!
Will the Coronavirus Cause a Cannabis Apocalypse?
No way! There is too much money to be made in this industry still! States aren’t willing to lose the tax revenues they intended for when they legalized! When it comes down to it, the coronavirus is just a hardcore flue strain. Healthy adults, with healthy bodies need not concern themselves with it too much!
Worst possible scenario is everyone gets the coronavirus and our illness takes longer than anticipated to recover from. This could create a scenario where investors become more cautious and less ambitious to enter sexy industries like the cannabis market. With the cannabis market already struggling to raise money, many smaller companies shut down and only the “big cannabis” companies remain.
The most likely thing to happen is several people get infected, the market takes a small dip, everyone recovers from their violent sickness, and everything goes back to normal!