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How Do Crisis and Economic Struggles Affect Cannabis?

The cannabis industry is shaping up to be a rather resilient marketplace. That probably doesn't come as much of a surprise to anyone who has been a part of the space for some time. Long before it was an "industry", it was and is still seen as a cannabis community. Members carried on a spirit that fought against unjust laws. Even when hassled, raided, and shut down, many would continue to rise up. 

In time, the public started to welcome the 'stigma' that was cannabis and realize that the negative views were just propaganda. The acceptance of the plant then began to change. Despite differing perception, crises continue to plague the industry in several forms. From unfavorable regulatory shifts to failed ballot initiatives, to the EVALI crisis, cannabis has continued to adjust to tough times and difficulties. Despite these setbacks, much of the market continues to believe in its longevity.

With the ongoing COVID-19 pandemic, cannabis has shown itself to be an essential element to the public. Providing medical relief to scores of people, the plant and its byproducts will continue to be available to qualified patients and legal recreational consumers. The adult-use recreational market has proven itself to be the economic force many have expected it to be, regardless of fluctuations as shutdowns took effect. 

Is Cannabis Recession-Proof?

Despite some staggering setbacks, the answer typically leans towards yes—especially if you ask most industry experts. One telling sign that points to cannabis being recession-proof is largely based on the impact that the 2007 to 2009 recession had on the alcohol and tobacco industries.  

In a 2020 article from Cannabis Business Times, experts highlighted the alcohol industry's market behavior and sales as a guide to surviving troubling financial times. Now, cannabis is being considered an essential item, much like alcohol is to some. Experts cited alcohol sales during the Great Recession as a possible indicator of the cannabis market's potential. During that crisis, wholesale alcohol sales maintained a steady position and even saw growth at points. 

MJ Biz Beer Wine and Liquor Wholesale Sales 2006-2012 The Relationship Between Cannabis and Alcohol

The idea of a recession-proof market has been in discussion for some time. Many industry experts continue to report that cannabis has now fallen into the same category as alcohol and tobacco, since consumers are increasingly deeming it to be essential.

One expert went so far as to say "sin businesses" such as cannabis, alcohol, and others fare better than traditional products in difficult times. For these consumers, when it comes time to cut back on spending, marijuana and/or alcohol aren’t likely to top the list for consideration.

Cannabis and the COVID-19 Pandemic

As the COVID-19 pandemic gripped the world early last year, the cannabis industry saw early ebbs and flows. By mid-March 2020, shops were reportedly taking preventive measures. Those efforts included, but were not limited to, providing medical patients with priority, enforcing social distancing while shopping, as well as encouraging online ordering, and home delivery. 

When the US initially rolled out the first COVID-19 restrictions, several dispensaries saw their doors shuttered for fears of exposure to the virus, deeming them 'non-essential'. This 2021 article from Marijuana Business Times highlights how categorizing marijuana as 'essential' was transformative for the industry during the COVID-19 pandemic. It didn't take long for recreational cannabis consumers to deliver some strong push-back, arguing that if alcohol and tobacco are being considered 'essential' products, than so should cannabis. 

Marijuana Businesses Allowed to Operate During COVID 19 Lockdowns MJ BIZ

Meanwhile, open locations reported less frequent sales with patients making larger purchases. However, as statewide quarantines were put in place, retail locations saw a surge of activity from patients and adult use consumers. Many customers panic-purchased cannabis products in fear of more dispensary closures. This led to record sales numbers for the industry. However, once the shutdown went into effect, sales plummeted as only medical patients could access stores in many states. 

Yet, despite the up and down nature of the market, the cannabis industry is hiring. Despite layoffs hurting the market since 2019, cannabis-specific staffing firms have reported seeing 100% growth in temporary listings. Companies are looking for budtenders and shop help just as much as they are producing and manufacturing. While the work is temporary, experts believe that many temp-to-permanent roles could develop out of the uptick.

How do Top-Shelf and Solventless Products Fit in?

While cannabis at-large may weather the storm, solventless and other top-shelf products may take a hit in some younger markets. Consumers in these sectors are typically more concerned with low prices and accessibility. Therefore, they may only partake in top shelf products on limited occasions due to their high price points. This in turn drives the already low demand for high-end SKUs even further downward in these markets during difficult economic times.

If you are a solventless hash or rosin producer and have experienced a decrease in demand, it could be that the market you are serving is not yet mature enough for solventless hash products or price points. The loss in sales could also come from those seeking the most cost-efficient option for the time being. While they may want top-quality, they may be inclined to settle for a lesser product to ride out these uncertain times. 

On the other hand, the more mature connoisseur markets, are always seeking to keep top-tier products in rotation. While sales for some of these premium products may decline in younger markets, solventless extracted products such as ice water hash or rosin aren’t projected to lose their dedicated market of connoisseur consumers. This is likely to be exemplified in patient consumers seeking high-quality, terpene-rich, and solventless cannabis concentrate options. The same can be said for recreational consumers who are adamant about having rosin and other top-tier products. 

Simpson Solventless Hash Rosin 11 SKU Lineup

Pictured: 11 different solventless hash rosin SKUs made by Eric Simpson (Instagram: @simpsonsolventless)

Producers who offer several types of SKUs have been known to see the best chance of profitingIf you have an existing cannabis processing operation, adding a solventless division can offer your business high margins. This is due to the low start up costs and high dollar selling points that come with solventless extracts.

Not only will you diversify your brand by offering a wider range of SKUs, you will also attract different niches of customers including connoisseurs. By widening your line, the brand may find itself with a better chance to cater to each consumer which in turn may garner the business to thrive. 

Next Steps

As cannabis continues to push forward with the rest of the world, signs point to even better days ahead for the marketplace. Whether it is recession-proof or not, it is clear that marijuana is as resilient as it ever was. Now emboldened by a billion-dollar market and a growing worldwide demand, cannabis will continue to strive to assert itself as an essential element in the lives of the community. 

For producers, solventless processing represents the most inexpensive, versatile way to enter the cannabis extracts market. In times of economic uncertainty, investing in a solventless operation provides your business with minimal overhead. Solventless extracts continue to prove themselves as a lucrative segment in the marketplace, especially when proper research and planning is executed before opening the doors. Products like rosin can cater to the high-end market while also creating a range of edibles, vape cartridges, and textures to serve those seeking a more affordable product. 

rosin butter in container

Pictured: hash rosin butter processed and pressed using PurePressure equipment and accessories.

Looking to add solventless cannabis extracts to your line of products? PureCannalabs would love to help you get started. They offer a variety of services ranging from lab space planning, to hash rosin SKU production mastery, to standard operating procedure packages, and much more. Click here for more information on PureCannalabs services or contact team@purecannalabs.com.