Analysts have been predicting the world’s inevitable evolution into a digital-first society for many years, but none of them took a global pandemic into account when building their forecasts. With non-essential storefronts closed at the onset of COVID-19 and a majority of people continuing to work remotely, businesses and consumers alike have more willingly embraced the virtual world. In October 2019, International Data Corporation predicted digital products and services would drive more than 50 percent of gross domestic product worldwide by 2023; COVID-19 unexpectedly accelerated the digital transformation and, in the span of seven months, propelled society five or ten years down analysts’ timelines.
The cannabis industry is no outlier in this regard. The pandemic brought to local, state, and (hopefully) federal legislators the overdue realization certain legacy rules no longer are relevant—or reasonable—in the modern world. Consumer buying habits and preferences have shifted dramatically in favor of e-commerce and delivery, with the most notable adjustment being a greater acceptance of cannabis throughout society. Cannabis e-commerce and delivery are booming, compelling retailers to invest in digital engagement and delivery services to embrace their role more fully. In addition to cannabis’s designation as an essential service in most states where it is legal, which highlights just how deeply entrenched cannabis is in American society, the COVID-19 pandemic has fast-tracked the course of the cannabis industry.
Once considered a “gateway drug,” cannabis now is legal in more than thirty-three states and more widely accepted by society. Use in the United States was on the rise prior to the pandemic, but the rate skyrocketed 46 percent after pandemic lockdowns began. The situation created the perfect storm: People were stuck at home with extra free time, and cannabis was an appealing new activity for them to try. Experienced users turned to cannabis more often to manage increased anxiety, stress, and depression as a result of the pandemic.
In these unusual times, the climb in cannabis use does not necessarily equate to increased foot traffic in dispensaries. Shelter-in-place orders and restrictions on retail access in the initial weeks of the pandemic forced customers online to order delivery and curbside pickup. Although such options are legal in some states, other states temporarily permitted them to ensure essential cannabis businesses could continue operating while complying with social-distancing requirements.
Within a matter of days, dispensary owners—especially those without established delivery operations—found themselves in a precarious situation, uncertain how to continue operations and keep sales up. To stay in business, retailers had to revamp strategies swiftly and focus on building their online presence. According to “The State of the Cannabis Industry” report compiled by Vangst, LeafLink, and Flowhub, 79 percent of dispensaries successfully adapted and began offering curbside pickup and delivery after the pandemic hit. Ultimately, the crisis pushed many owners previously reluctant to embrace digital transformation to invest in and implement delivery, and existing services thrived under the surge in demand.
The scrambling to become omnichannel was well worth the effort. Ganja Goddess’s consumer poll in September revealed since the outbreak of COVID-19, 89 percent of respondents shifted to delivery as their main purchase channel while only 6 percent continue to prefer storefronts. Despite dispensary doors reopening and the option to purchase cannabis in-person being restored, we are seeing customers continue to opt for delivery. According to the survey, the sustained shift in purchasing behavior is largely due to the convenience of delivery, with safety concerns showing less influence in the decision-making. That more shoppers choose delivery for its convenience rather than for safety indicates consumers probably will continue to demand delivery even after the pandemic ends. They have tasted the ease of browsing and purchasing from the comfort and privacy of their homes and will not be keen on giving up the on-demand lifestyle.
As the coronavirus crisis evolves, so too does the question of how to continue cannabis business operations. With consumers’ predilection for delivery expected to continue well beyond the pandemic’s final days, existing delivery services have more fully embraced their role and homed in on finding ways to draw in customers and cater to their preferences. Meanwhile, dispensaries that previously sold only through brick and mortar are investing in building online presences and establishing e-commerce sales channels to prepare for the digital future.
If delivery is to be the future of cannabis retail, then delivery must be available. Only some states with legal medical and recreational programs have allowed delivery and pickup since legalization, while others—like Utah, Louisiana, and Pennsylvania—are operating under temporary rule changes that permit the service. Although some explicitly stated such permissions will be revoked after the pandemic, consumers and businesses are questioning whether that will be the case. Delivery operations have proved to be not only extremely successful and safe, but also highly preferred by customers. Delivery also benefits patients who are sick, disabled, or unable to travel and those who lack a caregiver, empowering them to purchase cannabis independently and without unnecessary strain.
The overwhelming popularity of cannabis delivery and curbside pickup is impossible to ignore. With consumers voicing demand, state legislators will be hard-pressed to reinstate limitations on these purchasing options. The pandemic may have caused a fundamental shift in how decision-makers view cannabis, opening their eyes to the lack of value in certain already-antiquated rules related to the industry.
The pandemic has acted as a reality check for consumers and businesses alike, accelerating many aspects of society and changes in consumer behavior that otherwise would have taken years to transpire. Delivery and e-commerce are disrupting the cannabis space, dispensaries are moving online, and a growing number of people are embracing and using cannabis for both recreational and medical purposes. One of the most consequential outcomes for the industry has been its designation as an essential service, a label many hope will fast-track federal legalization.
The post-pandemic implications are unclear, but powerful shifts in perspective and preferences point to some level of permanency. I see there being an initial explosion of people socializing outdoors, returning to retail, and picking up old habits, but undoubtedly there will be lasting impressions. COVID-19 has altered the course of the cannabis industry, effectively wiping away the expected years of work necessary to shift society’s perception, bring dispensaries into the digital age, and ease strict limitations. There is no doubt digital reigns above all, but we will have to wait for answers to the rest.
Zachary Pitts is chief executive officer and founding partner at Ganja Goddess. For thirteen years, he has operated a variety of legal cannabis businesses including retail, delivery, cultivation, and manufacturing. Pitts began his tenure in the industry producing Ganja Goddess edibles in 2007 and co-founded the statewide delivery service Goddess Delivers in 2011. In 2014, he opened a retail storefront, Ganja Goddess Seattle.