The US currently has over 1500 cases of coronavirus, with 40 deaths. With coronavirus reaching pandemic status, there’s naturally a concern from a public health perspective. However, investors and business owners should also view the pandemic from an economic standpoint.
The virus has essentially shut down Chinese manufacturing, which nearly every industry relies on, either for sourcing equipment or product manufacturing.
While cannabis companies aren’t growing the cannabis itself in China, they do rely on hardware, like vapes, to sell to their customers. In a world where adult-use states are facing severe shortages, a delay in Chinese manufacturing can hit the cannabis industry hard on vape sales.
Mature cannabis markets, like Colorado, show that the demand for vapes increases as markets mature. However, because of vaping safety concerns and a delay in Chinese production, we may see a change in customer demand towards flower instead of vape cartridges.
Even if your business isn’t reliant on vapes, you could still be affected by the coronavirus shutdown. If you rely on buying equipment or raw goods from China, that can be a serious hit to your manufacturing process. Because of coronavirus, cannabis businesses may experience:
Hardware shortages.
Delays in custom products.
Lab testing delays due to a lack of equipment.
Less raw hemp coming to the US from China.
Higher prices per unit.
Of course, larger cannabis firms are riding out the storm more comfortably, thanks to their ability to order in bulk. Smaller companies, however, may feel more pressure from the coronavirus-related delays.
That’s not the only way coronavirus has affected the cannabis industry. Spring is a popular time for industry events and conferences, but many of these events are canceled. While this isn’t the end of the world for the industry, the cancellation or postponement of these events means entrepreneurs have fewer opportunities to make connections.
We don’t know for sure how bad the fallout will be from coronavirus for the cannabis industry. For companies that were reliant on Chinese products, it’s a chance to try sourcing elsewhere to fulfill the supply chain. Although coronavirus has been a heavy blow to the world’s economy, it may give other manufacturers across the globe more opportunity.
For the latest information on the new coronavirus, please refer to the CDC.
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