How Coronavirus is Impacting the Cannabis Industry

The coronavirus scare continues to impact the global economy, causing disruptions to supply chains, wreaking havoc on travel and spooking the stock market.

As the virus continues to spread, we’ve been following the story closely at MNI, tracking the outbreak’s impact on the U.S. manufacturing sector.

Today, we’re taking a detailed look at the outbreak’s effect on businesses in the cannabis industry.

Supply Chain Disruptions

With so many companies reliant on foreign-sourced material, disruptions caused by coronavirus fears have exposed vulnerabilities in the global supply chains.

A number of industries rely on components, parts and ingredients from China. The cannabis industry is no exception.

For instance, consider that roughly 72% of pharmaceutical ingredients are manufactured outside the U.S., with much of that development occurring in China.

Hardware Shortages

Given the faced-paced nature of the industry and an ever-changing regulatory environment, supply chain challenges for cannabis businesses were an issue even prior to coronavirus.

Those sourcing from China were already dealing with uncertainty from an ongoing trade war, while the vaping illness scare caused setbacks for some companies.

Now, due to the coronavirus outbreak, many cannabis businesses that source hardware from China are faced with additional shortages and delays.

Cannabis companies are reporting supply disruptions specifically in hardware that aids in consumption, including vaporizer hardware, vape cartridges and even batteries.

Cannabis Events

We’ve heard reports of conferences and events being canceled by tech giants like Google and Facebook due to coronavirus, but trade events in niche industries like cannabis have felt the hit too.

Trade shows and public events have served as a vital component of the rapid growth of the cannabis industries, but now many businesses are seeing important events canceled.

Natural Products Expo West postponed its event in Ananheim, CA, as did CannaTech, a Tel-Aviv medical conference that focuses on health applications in cannabis.

Some events are still a go, such as the three-day Cannabis Conference 2020 scheduled in Las Vegas April 21-23.

Pot Stock Shock

Pot stocks suffered a setback in 2019 as supply shortages persisted in Canada and the rollout of legalization in some U.S. states did not prove as lucrative in high-tax areas that could not compete with black market pricing.

Now, the stock market continues to reel from a major selloff, losing roughly $6 trillion in value on coronavirus fears.

The cannabis industry has not been immune to the spooked market. Cannabis companies and ancillary industries that support the cannabis industry, such as makers of LED bulbs, are also feeling the pain.

Domestic Suppliers & Growers May Benefit

The good news? China seems to have succeeded in containing the outbreak, with a number of factories back online after several weeks’ hiatus.

Notably, though, new cases continue to appear in China, this time brought in by travelers returning from high-risk areas.

It’s also not a bad time for domestic suppliers of cannabis hardware and supplies.

Cannabis giant Curaleaf, as reported by Bloomberg news, recently bought $2 million worth of vapes from a domestic supplier – a quantity that should last the company about 5 months.

U.S. hemp producers stand to benefit from the China coronavirus-related slowdown, as reported by Hemp Industry Daily. China supplies a huge portion of the world’s hemp and CBD supply.

The coronavirus crisis could potentially turn this on its head, providing opportunity to American growers. Interested in reading more about businesses in the cannabis industry? Read our post 7 Innovative Businesses Supporting the U.S. Cannabis Industry.

Are you a cannabis-related business or do you provide service/supplies to the cannabis industry?

Make sure you’re listed in the North American Cannabis Industry Business Database so that new customers can find you! Learn more here.

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