The Coronavirus is forcing many countries around the world to adopt extreme measures to stop the spreading of the virus. From closing all the restaurants and schools to pushing many people to work from home when possible, the whole world is affected by this global pandemic. Inevitably, the economy is getting a major hit, especially with regards to the tourism industry. However, there are a number of sectors that will be affected by this slowing down of the market in general. And the cannabis industry is among them.
Advice to growers
In the US, the Massachusetts Cannabis Control Commission will close its offices to the public and is urging licensed cannabis companies to take precautions to protect patients, consumers and workers. The commission has told growers, processors, and retailers to “encourage good hygiene, urge employees to stay home when they feel sick, and to be flexible and considerate with sick leave benefits.” This directive was released after some cannabis workers felt pressured to come to the workplace even when feeling ill.
Disruption in the supply chain
Not only that, as disruptions are expected also in the cannabis supply chain, since a lot of moving parts of this chain come from China, such as LED bulbs. “I am aware of major delays for R&D projects due to the lack of workers returning from Chinese New Year due to the back-to-back nature [with the] coronavirus. While work has resumed in major areas like Shenzhen, the backlog due to the virus is causing extended timelines and lower factory output efficiency due to continued labor shortages,” Danny Davis, CEO of Offspring Holdings, told Forbes.
The labor shortage is indeed another issue; with countries’ borders closing up, many migrant workers cannot reach their job place, especially in British Columbia, Canada. “I’ve been on the phone all morning and with this Covid-19 virus and people not being allowed into the country, the farming community in B.C. is in a panic because there are so many farmers that rely on the arrival of migrant workers from Mexico and Central America. Suddenly they’re asking what’s going to happen now because their workers will have a hard time entering Canada and if they do enter, they’ll have to go into two weeks of self-isolation just like all the rest of us. It’s a big issue right now for farmers in B.C.,” said Delta South MLA Ian Paton to Delta-Optimist.
Cash flow issues and trade show cancellations
On top of that, the cash flow in the cannabis industry was already a major issue before the virus outbreak. Morgan Paxhia, managing director of San Francisco-based Poseidon Asset Management, said the virus – combined with the existing tight capital climate in the cannabis industry – could potentially result in some MJ businesses going under.
“We’re in the middle of this capital crunch – this Darwin phase, we like to call it. And [the coronavirus] is only exacerbating the situation, because it’s just causing uncertainty, just like it’s doing to the broader markets,” Paxhia said to GreenEntepreneur.
“We could even see good companies start to fail because their access to capital is getting super tight.”
Finally, as we have seen in the last week, an increasing number of cannabis trade shows and workshops are getting either cancelled or postponed, as in many countries around the world big events are banned until further notice.