COVID Archives - Green Market Report

Debra BorchardtDebra BorchardtJune 10, 2020
growGeneration-logo.jpg

6min8470

Grow Generation Corp. (NASDAQ:GRWG) stock fell over 3% in early trading after the company announced a $35 million stock offering and gave hints of potential COVID troubles ahead.

The hydroponic store chain filed an S-1 to offer $35 million in stock plus a 30-day option to purchase up to an additional 15% of the shares or $5.25 million. The company said in a statement, “We intend to use the net proceeds from this offering primarily to expand our network of hydroponic/garden centers through organic growth and acquisitions and general corporate purposes.”

However, within the S-1, GrowGeneration hinted that there could be problems on the horizon as a result of the pandemic.

The company stated in its filing that COVID-19 was affecting its operations. “Although we have been deemed an “essential” business by state and local authorities in the areas in which we operate, we have undertaken the following measures in an effort to mitigate the spread of COVID-19 including limiting store business hours, and encouraging employees to work remotely if possible. Moreover, the COVID-19 pandemic has caused temporary or long-term disruptions in our supply chains and/or delays in the delivery of our inventory. Further, the COVID-19 pandemic and mitigation efforts have also adversely affected our customers’ financial condition, resulting in reduced spending for the products we sell.”

The company said that many of its suppliers were experiencing operational difficulties as a result of COVID-19, which in turn may have an adverse effect on its ability to provide products to our customers.

Manufacturing plants have closed and work at others curtailed in many places where we source our products.  Some of our suppliers have had to temporarily close a facility for disinfecting after employees tested positive for COVID-19, and others have faced staffing shortages from employees who are sick or apprehensive about coming to work.  Further, the ability of our suppliers to ship their goods to us has become difficult as transportation networks and distribution facilities have had reduced capacity and have been dealing with changes in the types of goods being shipped.

GrowGeneration also noted that returning to business, as usual, may not be so simple.  “Once we are able to restart normal business hours and operations doing so may take time and will involve costs and uncertainty. We also cannot predict how long the effects of COVID-19 and the efforts to contain it will continue to impact our business after the pandemic is under control. Governments could take additional restrictive measures to combat the pandemic that could further impact our business or the economy in the geographies in which we operate. It is also possible that the impact of the pandemic and response on our suppliers, customers and markets will persist for some time after governments ease their restrictions. These measures have negatively impacted, and may continue to impact, our business and financial condition as the responses to control COVID-19 continue.”

For now, the company said things seem to be okay. It said that the difficulties experienced by the suppliers had not yet impacted its ability to get products to customers. The company also noted that it does not significantly depend on any one supplier. “However, if this continues, it may negatively affect our inventory and delay the delivery of merchandise to our stores and customers, which in turn will adversely affect our revenues and results of operations. If the difficulties experienced by our suppliers continue, we cannot guarantee that we will be able to locate alternative sources of supply for our merchandise on acceptable terms, or at all. If we are unable to adequately purchase appropriate amounts of inventory, our business and results of operations may be materially and adversely affected.”

Currently, GrowGen has 27 stores, which include 5 locations in Colorado, 5 locations in California, 2 locations in Nevada, 1 location in Washington, 4 locations in Michigan, 1 location in Rhode Island, 4 locations in Oklahoma, 1 location in Oregon, 3 locations in Maine and 1 location in Florida. GrowGen also operates an online superstore for cultivators, located at www.growgen.pro and www.growgeneration.com.

 

 


Debra BorchardtDebra BorchardtJune 9, 2020
hempplant.jpg

5min19491

Legal cannabis sales continue to grow despite the strength of the illegal market. The new State of Legal Cannabis Markets report from The Arcview Group highlights the strengths of the industry going into 2020, while also acknowledging the challenges ahead.

Arcview partnered with analytics firm BDSA and is forecasting that worldwide spending on legal cannabis will grow 38% to $20.4 billion in 2020. Despite this, the lions share of purchases occur in the illegal markets. The report estimates that in 2019 $214 billion was spent in the illicit channels, while $14.8 billion was spent in the legal market.

This had been one of the biggest arguments for legalizing marijuana. Activists promised that if cannabis was legalized, then the illicit market would crumble because consumers would want to support legal businesses and enjoy the tested products with lots of variety. Instead, states that have enjoyed legal adult-use cannabis for at least five years continue to see 30-50% of sales occur in the illegal market. It would seem that this would not support more legalization, but it could have the opposite effect.

The report suggests that high taxation resulting in higher prices for product in the legal stores is the biggest hurdle. It said, “Local regulators could lower tax rates and/or relax regulations in pursuit of a quicker reduction in illicit-market sales, driving more legal spending and ultimately more tax revenue.”

This will be harder than it sounds. Oklahoma opted for a typical sales tax of 4%, while Washington is at an eye-popping 39%. California attempted to keep cannabis taxes from increasing, but it was blocked. It seems the state is pleased with the money it gets despite the effect it is having on pushing customers to cheaper options.

COVID’s Silver Lining

The COVID-19 pandemic certainly affected the industry for the first half of 2020, but the lingering effects will still be felt throughout the rest of the year. Cannabis was deemed an essential service in many states, but that didn’t mean all companies thrived under that designation. The report suggests that a recession starting this year could have short-term impacts that could be dire for some cannabis companies. Still, there could be a silver lining.

“State tax shortfalls due to recession could prompt more legislatures to proceed with cannabis legalization sooner rather than later,” read the report. It has the support of the population. BDSA’s fourth-quarter Consumer Insights study determined 29% of Americans already consumer cannabis. States that legalized cannabis also experienced an increase in cannabis consumers. In other words, passing new legislation would be popular and in turn increase, the tax revenue as more consumers come into the industry.

New Legalization

The flip side to COVID and new legislation is that with quarantines in place, it’s hard to push through new legal states even though it’s a big election year. 2016 was a big year for new states, but 2020 looks to be less so. Only three states have initiatives on the November ballot. Mississippi for medical use, New Jersey for adult use, and South Dakota for both. With limited federal aid, Governor Cuomo is considering cannabis legalization as a key strategy to generate crucial revenue streams for NYC and the entire state.

New Jersey had tried to pass legislation in 2019, but couldn’t get the three-fifths majority needed from legislators. Now the state is letting voters decide and it is expected to pass. That means sales could begin in 2022 or sooner. The report forecasts that New Jersey could jump from $107 million in 2019 spending to $1.3 billion by 2025.

The issue of federal illegality still looms over the industry. All the legislation that looked promising has stalled. While some thought President Trump might make a legalization move to garner support as his popularity declines amongst his base, he has not signaled any such effort. The Democratic nominee Joe Biden has taken a moderate approach and according to the latest CNN poll, looks to be leading Trump. However, COVID and racial injustice issues look to be the hot button issues, pushing legalization to the back burner


Julie AitchesonJulie AitchesonJune 1, 2020
sunnyside.jpg

7min5430

With terms like “social distancing”, “quarantine”, and “safer at home” orders now common parlance thanks to the Covid-19 global pandemic, it seems an odd time to forge ahead with opening new retail establishments, yet several determined cannabis companies are betting on a better future and doing just that.

 Small business website “The Balance” itemizes the expenses associated with opening a storefront, which include licensing fees, rent, inventory, staffing, and equipment to name a few.  To open even a small business in an inexpensive city or town can cost thousands of dollars. Factor in the extra costs retailers will have to swallow to stay within Covid-19 guidelines for reopening such as plexiglass cashier guards, protective equipment for staff, and restrictions on the number of customers allowed in the store at any one time, and the overhead becomes untenable for many current and aspiring shop owners.

New Dispensaries

Despite these factors, companies like cannabis product manufacturer Green Thumb Industries, cannabis testing laboratory Cannasafe, and cannabis retailer Canna Provisions are expanding their enterprises.

Green Thumb Industries (OTC:GTBIF)  announced that it would be opening its fourth retail location in the Las Vegas, NV area on May 13, as well as the eighth store in Illinois on May 28. This makes for a total of forty-five storefronts nationwide for Green Thumb, with four new locations opening since the Covid-19 crisis began. 

Green Thumb’s approach involves an emphasis on efficient curbside pick-up and delivery strategies to safeguard customer and staff safety. In a May 26 press release about the new Illinois location, Green Thumb Industries founder and chief executive Ben Kovler stated that his company has “continued to move forward through the ongoing COVID-19 crisis to provide jobs and much-needed access to well-being through the power of cannabis during these difficult times, as demonstrated by the opening of Rise Niles, our fourth opening since the crisis began.”

Cresco Labs  (OTCQX:CRLBF) opened Sunnyside River North, the first Illinois adult-use dispensary in Chicago in the prestigious River North neighborhood. Sunnyside opened for adult-use cannabis sales on May 28th for online orders and in-store pick up that day through a pop-up retail experience. “We are thrilled to be opening the first adult use store in Chicago under the state’s new legislation and to provide an example of what normalized and professionalized cannabis looks like with a location in a traditional business district, a local and diverse operating team and a tremendous amount of community input and support,” said Charlie Bachtell, Cresco Labs’ CEO and Co-founder.

Cresco Labs has said it has implemented procedures system-wide to eliminate wait lines, crowding, and social distancing during the COVID-19 pandemic and the River North location will launch with online orders only through Sunnyside.shop. Once customers receive a text notification that their order is ready, they can check-in at the Guest Experience Center at 22 W. Hubbard to be entered into the virtual pickup queue.

Meanwhile, Cannasafe has announced the opening of three new ISO-accredited laboratories in Oregon, Florida, and Illinois to help meet the increased demand for cannabis during the pandemic. Canna Provisions has opened a new storefront in Easthampton, MA with another in nearby Holyoke slated to open shortly. Another Lee, MA location shut down due to the pandemic will also be reopening. Canna Provisions is using a quick transaction model involving ID checks, a wireless ATM card reader, and frequent sanitizing to facilitate safe customer interface while offering additional support via Zoom links and instructional videos to help customers understand the new system. 

These considered moves by some of the industry’s best-known names have all of the makings of successful ventures, especially given the attention to the potential infection hazards inherent in storefront retail. Still, as demand for cannabis continues strong and companies build capacity to meet that demand, it remains to be seen whether Covid-19 and a potential “second wave” will frame a gamble on the future of in-person sales as one worth taking or not.


StaffStaffApril 7, 2020
dispensary.jpg

19min9421

Republished with permission from American Marijuana. Written by Dwight K. Blake. 

As of March 24, 2020, the coronavirus disease had swept through over 195 countries with over 260,000 confirmed cases worldwide. This caused a panic that led people to stock up on foods, toiletries, and other basic needs.

But how did it affect marijuana consumers? Let’s take a look at the survey presented below.

Compared with Marijuana, Which One Is More Important Amid The COVID-19 Pandemic?

weed vs other

Major takeaways:

  1. Across the board, the U.S. marijuana consumers would prefer food, face masks, hand sanitizers, and toilet paper over marijuana if they had to choose between marijuana and these.
  2. Among these necessary items for the COVID-19 pandemic, a surprising 28% of the 990 participants would rather value marijuana above face masks.
  3. It’s obvious how 83% of the participants would rather choose toilet paper over marijuana but it’s a shocker to see that 5% of the same participants value marijuana above food during these times.

Number of Consumers Who Stocked Up on Marijuana Amidst The COVID-19 Pandemic

Major takeaways:

  1. 49% of participants DID stock marijuana products during the coronavirus pandemic outbreak while 51% DID NOT stock marijuana products.

Reason Why The U.S Marijuana Consumers Stocked Up On Marijuana Amidst the COVID-19 Outbreak

why stocked up weed

Major takeaways:

  1. 55% of those stocking pot said they did so to calm themselves during the coronavirus outbreak. Meanwhile, 22% of them didn’t even care but just wanted to stock up on some marijuana to chill at home.
  2. The other 23% stocked up on marijuana because of the fear of both the pandemic and marijuana product shortage.

Reason Why The U.S Marijuana Consumers DID NOT Stock Up On Marijuana Products Amidst the COVID-19 Pandemic

why did not stock up weed

Major takeaways:

  1. 36% of participants didn’t stock up on marijuana products because they didn’t worry at all about the marijuana product shortage while 35% of survey takers valued toilet papers, face masks, and hand sanitisers over marijuana products.
  2. The remaining 29% didn’t stock up on marijuana products as they didn’t feel the need to stock consumer goods at all.

If the U.S Government Imposes Nationwide Quarantine, Which Among the Following Activities Would you Rather Do?

If the U.S Government Imposes Nationwide Quarantine like Italy, Which Among the Following Activities Would you Rather Do?

Major takeaways:

  1. 28% of the 990 participants would rather binge-watch TV shows should the U.S. government impose a national quarantine, making it the most-preferred activity during self-quarantine.
  2. The least preferred activity is to do indoor exercise/sport activities, taking up only 13% of the 990 participants.
  3. 17% of them would just rather smoke weed during self-quarantine than doing any of the presented activities. This is even higher than the percentages of those choosing to surf the internet (15%), and to do indoor exercise/sports (13%).

Number of Consumers that Used/Consumed More Marijuana Products since the COVID-19 Outbreak

use weed more

Major takeaways:

  1. 34% of participants have consumed more marijuana products since the COVID-19 outbreak while the remaining 66% haven’t.

How Do U.S Marijuana Consumers Feel towards the COVID-19 Pandemic?

How Do U.S Marijuana Consumers Feel towards The COVID-19 pandemic?

Major takeaways:

  1. 54% of the 990 U.S. marijuana product consumers feel calm about the global coronavirus pandemic thinking everything will be alright while 40% are worried sick.
  2. Only 55 (6%) of the 990 participants don’t really care about the COVID-19 pandemic at all.

Methodology and Limitations

To collect the data shown above, we surveyed 990 respondents who are U.S marijuana consumers. A qualifying question was included to make sure the participants are truly weed consumers. An attention-checker question was also added to ensure the participants did not mindlessly answer questions.

Because the survey relies on self-reporting, issues such as telescoping and exaggeration can influence responses. Please also note that this survey’s results do not reflect our opinions.

Fair Use Statement

If you know someone who could benefit from our findings, feel free to share this project with them. The graphics and content are available for non-commercial reuse. All we ask is that you link back to this page so that readers get all the necessary information and our contributors receive proper credit.


Debra BorchardtDebra BorchardtApril 6, 2020
shutterstock_1610350792-1280x1280.jpg

3min4370

Canada had originally allowed all cannabis dispensaries to remain open during the COVID19 pandemic. Over this past weekend, stores in Ontario were forced to close when that province reversed course and ordered the stores to close.

The list of essential businesses was updated on Friday, April 3 and dispensaries got the bad news that they were no longer considered essential services. The stores were allowed to remain open on Saturday, but that was it for customers.

Canopy Growth

Canopy Growth (NYSE:CGC) told BNN Bloomberg that it has begun a set of temporary job cuts. The company said on Friday that it has laid off roughly 200 staff members at its retail outlets. The company did note that it hopes to reopen some of the company-owned stores in Canada.

Canopy Growth closed 23 company-owned dispensaries located in the provinces of Manitoba, Saskatchewan, and Newfoundland and Labrador. The company has also closed its visitors’ center at its Ontario headquarters building.

High Tide

High Tide Inc. (CSE:HITI) (OTCQB:HITIF) also closed stores on Saturday at midnight as a result of the Ontario order. The stores will close for a 14-day period and all retail staff at the Ontario Stores have been temporarily laid-off as the company awaits further updates from the Province.

“To mitigate the economic headwinds being caused by the COVID-19 pandemic, we are optimizing staffing levels across the organization, working with landlords to abate or defer rent, minimizing operating expenses and delaying capital expenditures wherever possible,” said Raj Grover, President & Chief Executive Officer. “Despite the temporary forced closures in Ontario, our 27 other retail cannabis stores across Alberta and Saskatchewan remain open for the time being, while Grasscity.com has recently experienced a doubling of its average weekly sales as people around the world are increasingly shopping online from the safety of their homes for their smoking accessories and cannabis lifestyle products,” added Mr. Grover.

 


StaffStaffApril 2, 2020
FDA3.jpg

5min6160

Within days of proclaiming in social media that its CBD products could cure COVID19, the Food & Drug Administration (FDA) sent a warning letter to NeuroXPF. The letter stated, “We request that you take immediate action to cease the sale of such unapproved and unauthorized products for the mitigation, prevention, treatment, diagnosis, or cure of COVID-19.”

NeuroXPF is a cannabidiol product company founded by former NFL player Kyle Turley. The company boldly went on social media suggesting that by using its products it could help people’s immune systems in the fight against COVID19.

  • “Crush Corona . . . While scientists around the world are working 24/7 to develop a COVID-19 vaccine, it will take many more months of testing before it’s approved and available. However, there’s something you can do right now to strengthen your immune system. Take CBD . . . CBD can help keep your immune system at the stop of its game. . . . We want everyone to take CBD and take advantage of its potential to help prepare your body to fight a coronavirus infection. So, we’re making all of our products more affordable.” [from your website https://neuroxpf.com]
  • “Crush Corona! Your best defense against the COVID-19 blitz starts with a strong immune system. It’s what protects your body from the everyday attacks of bacteria, viruses, parasites and a host of other nasties. Learn more here: https://neuroxpf.com/crush-corona/” [from March 19 posts on your social media websites https://www.facebook.com/NeuroXPF/ and https://twitter.com/NeuroXPF]

Even people within the cannabis community chastised Turley for making claims that most knew would make it a target of the FDA. It may even have been a big PR stunt as the founder doubled down saying he’d welcome the FDA’s enforcement. He thinks such an action would expose the government for “covering up the potential of the plant.”

FDA Response

The letter stated, “We advise you to review your websites, product labels, and other labeling and promotional materials to ensure that you are not misleadingly representing your products as safe and effective for a COVID-19-related use for which they have not been approved by FDA and that you do not make claims that misbrand the products in violation of the FD&C Act.” The company has two days to make the changes and if it doesn’t it could result in legal action, including, without limitation, seizure and injunction.

CBD & COVID

While top scientists around the globe are looking for a vaccine and top medical workers are trying numerous methods to treat the deadly virus, Turley is basing his information on anecdotal evidence. He says he has had conversations with experts in the field but does not name the experts.

Other cannabis companies have received FDA warning letters in the past and have been able to address those issues and move on. Charlotte’s Web faced such a situation and made the requested changes. It makes selling CBD more challenging since the company can hardly even describe what it does, but Charlotte’s Web has satisfied the FDA and still owns a large market share in the CBD space.

The website does not mention COVID at this time and while Turley continues to state on his Twitter feed that he continues to believe in the effectiveness of CBD for COVID, the NeuroXPF feed does not mention the virus. It focuses instead on brain injury awareness.



About Us

The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


READ MORE



Recent Tweets

@GreenMarketRpt – 7 hours

In case you missed it. Weed Talk News 10/16/2020 via @ProCannaMedia

@GreenMarketRpt – 3 days

Green Market Report’s Marijuana Money October 16, 2020

@GreenMarketRpt – 5 days

Green Market Report Wins Big During 2020 Awards Season

Back to Top

You have Successfully Subscribed!