It seems nearly every business but those making hand sanitizer and disinfectant wipes has been hit hard by coronavirus. The cannabis industry is no exception. The Stash has reported before that pot shops were still struggling even as states started re-opening. But the problems the pandemic has brought forth for the cannabis industry track all the way back to the producers and processors of marijuana.
As The Stash explained in 2018, cannabis producers are the ones who grow the plant itself. They are also called “growers” or “cultivators.” Even though this is the foundation of every single cannabis business, it is the most unstable portion of the chain. Like any other farmer, cannabis producers are constantly at the risk of having a bad season.
If a natural disaster or even an unexpected temperature shift comes through, it can be devastating to the crop. Further, producers are under constant threat from the federal government now that protections against federal interference have been rescinded.
Cannabis processors are a separate entity. They’re also sometimes called “manufactures,” “extract technicians,” or even “extract artists” and “edible chefs.” Folks involved in that business transform marijuana flower into other products like concentrates, edibles, topicals, and more. Processors also package the product and must comply with specific regional regulations when doing so.
Processors are running into frequent and direct trouble when it comes to the pandemic. They have been incredibly susceptible to frequent disruptions of the supply chain. Although they package the cannabis product themselves, they don’t necessarily create the packaging. Most of it is ordered from overseas. During the pandemic, products ordered from China like vaporizers and other goods manufactured for cannabis consumption have been halted. Those disturbances in the supply chain are just one blow to the entire realm of cannabis production, distribution, sale, and use.
The cannabis supply chain takes a hit
The supply chain is always volatile when it comes to cannabis production, but it may never have seen more ups and downs than with COVID-19. Some states were already producing far too much marijuana and hoped to purchase less. The problem is, the producers already have crops growing, and can’t simply kill of the plant. As different cities and states around the country shut down, many left room for only the sale of medicinal marijuana.
That’s another blow to the producers in the long run, since dispensaries simply wouldn’t need to stock up as often. Even states that allowed for continued sale of adult-use cannabis had to adjust to the majority of their sales being carried out solely through curbside pickup, meaning far fewer people were able to buy weed each day.
Social distancing guidelines have also put an end to large gatherings, meaning trade shows and other conventions where people would show off product have been cancelled. Everything that harms the overall sale of marijuana is bad news for producers, too. If people are buying less pot from stores, that means stores are buying less pot, too. That means processors aren’t selling as much either.
Reports have come out that workers in the cannabis industry have experienced pressure by their employers to show up at their jobs even when they didn’t feel well. That led the Massachusetts Cannabis Commission to ask growers and processors of marijuana to be more considerate with sick leave benefits. The Commission also asked those employers to clean more thoroughly and frequently, encourage good hygiene, and ask employees to stay home if they feel unwell. The Commission pointed out that medical marijuana patients may be immunocompromised, and therefore those sanitation requirements should be taken seriously.
Most producers and processors are having to find ways to socially distance and get sufficient PPE for employees, while still keeping up productivity. That’s no easy feat, and any negative impact on the business is one that’s felt especially brutally right now. Since marijuana industries are already suffering, having to fork out extra cash for masks and other protective gear is a challenge.
Plus, social distancing may mean a loss of productivity, if you can only have so many people in one area at a time. Certain cities and jurisdictions also mandate that if a worker tests positive for coronavirus, the entire facility must be deep cleaned within 24 hours of the positive test result. That shuts down production, costing the businesses a certain amount of time available to work, plus the cost of the third-party cleaning company.
Plus, where other businesses have insurance that can help them in situations like the pandemic, most cannabis businesses aren’t able to get those same protections. They also don’t have access to loans that can help pay for protections of their employees, or even help keep those employees on the payroll. If worse comes to worse, they don’t have bankruptcy protections, either.
Producers grow lower-end product to meet demand for cheaper weed
To adjust to the changing times and damaged economy, many marijuana producers are starting to grow lower-end weed. The market for a cheaper product is growing. However, that means the growers have to adjust their plan and the layout on their farm. They have to refocus their efforts, plant new seed, and develop new specialty methods for growing that particular product. Likewise, processors have to come up with new and exciting ways to reinvent that cheaper bud into new products, with new packaging, all of which still has to comply with local regulations. Additionally, that transformation has to happen in a way that doesn’t come at the expense of medical patients who still need their prescription.
Specialty processors of all forms are having to adapt to work around COVID-19. The Specialty Food Association President, Phil Kafarakis, says the challenges companies face are only exacerbated when the company itself is small. He explains, large corporations have more cash flow and more ability to standardize. Those larger companies also have more options for how to change up those standards when needed.
For instance, if an issue arises with transportation of the product, a large company may have other partners it can quickly turn to instead. Small companies may have only one contract, and if something goes wrong with that transporter or distribution center, that means the production company is out of luck for a time.
Kafarakis also points out, companies big and small rely on financial partners. When the people trying to get cannabis products to market are struggling, deals with those partners get postponed or dropped altogether.