One trait that links successful cannabis businesses — the legal, the illegal and the somewhere-in-between — is their ability to be adaptable.
For years, they’ve had to move quickly to survive massive regulatory changes, to fight legal battles and to stay one step ahead of unforeseeable disasters, but those hardships have inadvertently prepared them for the most disruptive event in a generation: the coronavirus pandemic.
Safe and Sane
While shops across the country consider drive-thru windows or direct-to-consumer delivery services, cannabis retailers in Washington, the first state impacted by the COVID-19 outbreak, are handcuffed by stricter state regulations.
Yet, many have jumped into action with new measures to stay open while protecting their staff and employees.
Shy Sadis, who owns and consults for cannabis shops, immediately began thinking about ways to ensure a safe retail environment. Sadis opened The Joint in 2010, during the state’s medical marijuana era. Back then, dispensaries often had plexiglass walls, much like some bank tellers, with windows that could be used to pass IDs, money or product between customers and workers.
Sadis wanted to quickly build a similar wall in front of The Joint’s University District location, something that would maintain the necessary camera coverage, while mitigating the possibility of spreading the virus.
“It wouldn’t have been pretty,” he said, “but it would have made my customers and my workers safe, and I had the old plexiglass from the medical days.”
He said the state Liquor and Cannabis Board told him floorplan changes would have to go through the normal application process that would have taken a couple weeks.
“I called the LCB for a week and they denied me,” he said. “In this type of situation, you would think they’d want to do whatever they could for safety.”
By then, The Joint had taken additional steps to increase safety, including installing “spit shields,” supplying all the workers with N95 masks and having people ensure customers maintain proper distancing.
He told employees of The Joint, “‘If anybody wants to work, you can work. If you don’t want to work, I’m not going to force anybody.’”
The Joint’s Seattle and Burien stores initially shut down, but after about a week, enough staff members wanted to return and opened the shops with limited hours and a skeleton crew. Sadis said he also got a lot of calls from laid-off restaurant employees looking for work.
For some retailers, the pandemic has been an opportunity to get creative with how they service their customers.
Mana Supply Company opened Maryland’s first drive-thru window for medical cannabis patients. The company’s Edgewater dispensary was previously a bank, but its two drive-thru lanes had gone unused since opening for business in the fall of 2018. Mana owners Christopher Jensen and Matt Volz worked closely with state regulators to get the drive-thru approved and operational amid the pandemic.
“Our security system provides visibility all the way around the building (and) inside the secure delivery area and captures license plates,” Volz said. “The technology investment affords our patients a safe, secure and discrete process for our patients. We realized that a high percentage of our patients are elderly, handicapped or have reduced immune systems, and we wanted to protect them and make their lives easier.”
Jensen commended the way state officials have handled the pandemic, saying, “Their no-nonsense approach to this crisis is saving lives.”
In Pennsylvania, state-certified caregivers are allowed to pick up and deliver medical cannabis products for patients. State regulations only allow licensed caregivers to work with five patients at a time, but that cap has been temporarily lifted due to the coronavirus.
“This expansion provides us with the ability to actually get products to people who are stuck at home,” said David Clapper, president of Ethos Cannabis, a medical dispensary in Philadelphia. “We can use the same number of designated caregivers on our staff with many more patients.”
Ethos has taken several additional steps to ensure a safe environment for both patients and employees, including encouraging patients to order online and limiting the number of people in the dispensary at any given time. The company is also now encouraging first-time patients to have consultations with its onsite pharmacist over the phone, rather than in-person.
The Evergreen Market, a retail chain in Washington, has also put its phone lines to better use, implementing its Dial-a-Budtender (DAB) program to offer customers a way to get product recommendations and ordering assistance from a budtender who is working remotely.
“Our brand is heavily rooted in education, and our DAB team is able to keep that going while observing social distancing,” marketing manager Nikki Marangon said. “We currently ask that all customers pre-order (either online or by phone) to optimize social distancing. Inside our stores, customers will notice plexiglass shields at the registers, a limited quantity of shoppers, increased cleaning of surface areas and, of course, hand sanitizer throughout.”
The Worst of Times
It’s hard to imagine a more difficult time in which to open a retail business.
Yet, that’s exactly what the folks at CBD Store and More have done in the Atlanta suburb of Roswell, Georgia. With safety protocols in place, the company opened its doors on April 7, selling a variety of CBD products for people and pets, including products made by its parent company, Harvest Connect, and national brands.
“This is, most certainly, a unique time to open a physical store,” said Kevin Quirk, CEO of Harvest Connect. “But we felt it was important to try, even if this opening looks far different than what we originally planned.”
But, Quirk added, it’s also a weird time for customers, who are experiencing anxiety from the ongoing health and economic crisis.
In addition to the now-standard social distancing practices, CBD Store and More also installed an innovative curbside delivery system that uses a series of pulleys to give shoppers their goods without any person-to-person contact.
“We had this beautiful deck, and I wondered, ‘How can we utilize that?’” Quirk said.
The concept came to him one night in a fit of insomnia. On a notepad, he scratched out a drawing, complete with stick figures, and sent it to his team. Quirk’s sailing knowledge, combined with $30 worth of pulleys and some signage, had the system working in no time.
It’s a novelty, for sure, but it also allows sales to happen without customers even stepping inside the store. A banner provides shoppers with instructions. They can go online, call the company on the phone, use the Ring doorbell or even apps like Facetime to place orders and make payments.
Foot traffic has been slow in the company’s first few weeks, but Quirk is encouraged by the business CBD Store and More is seeing. He said the company’s pro forma financials projected $20,000 in its first month, eventually ramping up to $80,000 to $100,000 monthly. In actual revenue, Quirk said the company will probably generate $8,000 to $10,000 during the month of April — much lower than the pro forma, but that is to be expected during the pandemic.
He said the company is focusing much of its energy on education and introducing CBD products to new consumers.
“For this industry to grow, we’re going to have to grow the pie,” he said. “We can’t just keep stealing from each other.
The Spike of Uncertainty
As soon as the World Health Organization declared the coronavirus outbreak a global pandemic, cannabis retailers across the country saw their sales skyrocket.
Many states and individual retailers reported record sales during March, particularly in the second and third weeks of the month, as state officials began enacting a variety of stay-at-home orders.
But were people just stocking up? Or were they actually buying and consuming more cannabis?
The answer might be a bit of both, according to a survey conducted by one research firm.
From March 21 to March 24, SoapBoxSample surveyed 1,000 U.S. cannabis consumers in 48 of the 50 states (excluding Ohio and South Dakota), as part of its ongoing CANNApinion Poll, focusing on how the COVID-19 outbreak may be affecting their consumption habits.
While 51% of those surveyed said they were “somewhat” or “very concerned” that their personal supply will run out during the recommended quarantine, 68% of the respondents “agreed” or “strongly agreed” with the statement, “If I run out during this time, that’s ok, I can live without it.”
When asked what they would do if their supply ran out, 55% said they would abstain and go without.
But these numbers are far from static as people adapt to a new normal and stay-at-home orders have remained in place throughout much of the country.
“We are noticing really dramatic changes in people’s awareness and perceptions, even in the span of a week,” SoapBoxSample director of marketing Adriana Hemans told Marijuana Venture.
The poll had mixed results about whether people were consuming more, less or the same amount of cannabis. However, among the 38% of respondents who said they were consuming more cannabis since the pandemic started, 60% said they were doing so to relieve stress, 57% to ease anxiety and 34% were consuming to combat cabin fever.
“In an emerging industry like cannabis, consumer habits are still in the beginning stages of development, and the cultural changes caused by COVID-19 are likely to have long-lasting or permanent effects within the cannabis industry,” Jacqueline Rosales, chief operating officer of SoapBoxSample, said in a press release. “Perceived shortages, disruptions to family life and changes at the dispensary can all significantly impact the choices consumers make.”
Since marijuana businesses have been declared essential in 29 states, sales have fallen back to near-normal levels, if not even a bit lower than normal.
Rahn Bruns, owner of the Local Roots chain, said his shops haven’t had much of a change in revenue, but some customers are changing their buying habits. The stores see fewer customers, but average ticket prices have gone up. Cheaper flower seems to be popular, and shoppers are buying in bulk more.
The typical, laid-back experience of the store has been altered by social distancing, warning signs and people wearing masks.
“I think psychologically it plays into it as far as buying in bulk,” Bruns said. “I guess everyone’s just taking it a week at a time.”
Clapper says he’s seeing a similar trend, with cycles emerging as time goes by.
“A few weeks ago, when people were anticipating stay-at-home orders, we had a sales surge when people came to stock up,” he said. “However, it’s since flattened out more. It began picking up again this week (in mid-April) because people need to restock and because we can use the Caregiver Program to help more people who are not comfortable leaving their homes at this time.”
With cannabis businesses being one of the limited number of retail categories able to operate amid stay-at-home orders in Washington, Marangon said The Evergreen Market decided to focus on giving back to those in the community who need it most right now; a portion of the proceeds from April 17-20 sales were used to purchase face shields from Armorshield, which were donated to local hospitals.
But, she says, the true bright spot of the difficult circumstances has been the way The Evergreen Market staff has come together to keep the company headed in the right direction.
“Every person in every position has been a true team player,” she says.