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The sale of marijuana for recreational purposes became legal Wednesday in Illinois to the delight of pot fans – many who began lining up hours early at dispensaries. (Jan. 2)

AP Domestic

DENVER — The marijuana industry is embracing change.

Edible products and pre-rolled joints are out. Vape concentrates and loose “flower,” which can be packed into bongs or pipes or rolled into joints and provide more bang for the buck, are in. 

Stores are effectively closed. Instead, customers order online and pick up curbside, a major shift from when each buyer had to be personally verified by a licensed store worker. In California, stores have largely switched to an all-delivery model. 

The country’s burgeoning marijuana industry is working swiftly to adapt to its customers’ needs as the coronavirus outbreak wreaks havoc on the U.S. economy. With business owners unable to access federal bailouts because the drug remains illegally nationally and popular 4/20 events cancelled because of stay-at-home orders, sellers are pushing for new ways to reach customers and persuade lawmakers that legal weed has become a crucial industry for many Americans. 

“This is cannabis’s moment to find its purpose and its voice,” said Julie Armstrong, CEO of Montana-based cannabis analytics firm Aurelius Data. “It was the opportunity we never saw coming.”

The outbreak has brought new challenges for legal weed sellers. Social distancing has required retailers to essentially abandon their carefully designed stores and switch to curbside and delivery services. Statewide shutdowns have also forced the cancellation of 4/20 celebrations, which are usually the highest-sales periods of the year, and the date around which much of the industry’s planting, harvesting and production is scheduled.

And it also appears to have at least temporarily halted New York state’s marijuana reform efforts, which was widely seen as a major step in the road toward national legalization. Officials there appear to have set aside legalization efforts while they deal with outbreak, which has hit New York harder than any other.

But it’s also spurred many consumers to go on buying sprees to cope with the long dull days at home and anxiety over the nation’s mass layoffs and growing death toll, and prompted regulators in many states to declare cannabis shops essential business on par with groceries, gas and liquor.

It’s the “critical service” portion that has many cannabis advocates optimistic that the outbreak has become a once-in-a-lifetime opportunity to move further into the mainstream.

“It’s a really important point that we were deemed essential: In a sea of chaos, this was one of the biggest moments in our industry’s history,” said Morgan Paxhia, managing partner at California-based Poseidon Asset management, which invests in cannabis businesses.

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Store operators say it’s about time regulators began treating marijuana stores on par with comparable retailers. In Colorado, regulators are even letting cannabis store workers get their mandatory state licenses remotely, instead of having to show up in person at the licensing office.

“It would have normally taken two to five years for lobbyists and legislation to catch up to where California is today,” said Christian Schenk, CEO of delivery company Driven Deliveries Inc.

Industry experts say this could also be the necessary push to persuade Congress to permit marijuana businesses to use banks like any other business, because cash could potentially be a vector for spreading coronavirus. Banks are generally reluctant to let marijuana businesses get accounts for fear they’ll be targeted by prosecutors chasing drug traffickers.

The Trump administration has so far remained silent on the role of marijuana during the national emergency, leaving states to decide how to proceed, so most have either maintained or even broadened access, via delivery and curbside service. Eleven states have legalized recreational marijuana, along with the District of Columbia, and 33 states permit some form of medical use.

Massachusetts stands alone as the only state now limiting legalized pot shops to only medical users, shutting out recreational buyers. Gov. Charlie Baker argued — and a judge agreed — that keeping the shops closed to recreational buyers would help protect public health, a decision applauded by the anti-legalization group Smart Approaches to Marijuana. Some health experts say consuming marijuana and smoking it in particular could put the user at a greater risk from an coronavirus infection, since it attacks the lungs.

“While other industries are accepting closures as a part of what must be done to protect vulnerable populations, the marijuana industry has chosen to kick and scream at the prospect of even a momentary loss of profit,” said Kevin Sabet, the executive director of SAM, and who worked for several presidents in the White House Office of National Drug Control Policy. “The actions taken by the industry should serve as a warning to other states considering marijuana commercialization: This industry will do everything in its power to try and bend leaders to do its wishes.”

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An estimated 243,000 full-time-equivalent employees worked in the legal marijuana industry across the U.S. as of January 2020, according to Leafly, an online directory of cannabis retailers. That’s up 15% in a single year.

In comparison, the politically popular coal mining industry employs just about 50,000, according to federal statistics.

Consumers, of course, are driving that growth. 

Paul Hartje, the consumer experience director for Denver dispensary Seed & Smith, said business rocketed 15-20% as the stay-at-home orders rolled out, but has settled down to be about 5% above normal.

“People are still stockpiling,” he said.

Part of that may be in preparation for 4/20 celebrations. Denver has historically been the site of the biggest 4/20 each year, but city officials are asking celebrants to stay home. In response, dispensaries are organizing Zoom video conferences complete with live music to help mark the occasion.

That doesn’t mean cannabis sellers entirely have a lock on the market. 

One industry expert said he’s closely watching sales over time because price-conscious consumers may shift away from legal stores and start buying cheaper cannabis from black-market dealers who don’t have to pay taxes or get their products tested as a state lab. They might also, he said, start growing their own.

“People are going to continue to be bored but that doesn’t mean they’re going to be purchasing from the legal market if the price is lower elsewhere,” said Matt Karnes with GreenWave Advisors, a cannabis analysis firm. “It really comes down to price and how competitive it all is. As unemployment rises and times become tougher for everybody, if people aren’t working, they may think it’s time to grow my own stuff, and maybe I’ll sell it on the side.”

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