April 20 has always been a big holiday for the cannabis industry. According to data analytics company Headset, last year's 4/20 saw sales increase 112% compared to the average sales prior four weeks. Every state had a sizable lift. California had the largest of 122%, followed by Washington State with 117%. Colorado had the smallest increase of 97%. Nevada was in the middle of it all with 101.1%.
This year, the Covid-19 lockdown has killed the cannabis celebration buzz. There are no live events and most of the consumers are having product delivered and in some states, like Massachusetts, you can't buy recreational product at all. Certainly the companies are saving money by not producing live events, but these events are celebratory and build customer relationships.
Last year, even mainstream consumer brands jumped in on the celebration. From Pizza Hut to Doritos, it seemed like everybody was a stoner for the day. This year's somber death tolls from Covid-19 make such silly celebrations feel inappropriate.
Many brands are instead offering virtual 420 celebrations, like the Green Solution in Colorado. The company will showcase rappers like Devin the Dude and Marc E. Bassy. There are promotions and a food truck will be around on Monday with free takeaway meals for customers.
Bogart That Joint
Cannabis is often a very social drug that is shared in a group, but group interactions aren't happening and that changes the consumption dynamic. John Docherty, President at Lexaria Bioscience (LXRP) said, "Recreational smokers should avoid smoking cannabis at all costs on and beyond 4/20, as it can make you more susceptible to severe Covid-19 complications. Instead focus on enjoying cannabis in the form of edibles. There are many that offer faster onset in comparison to smoking, as well as a longer-lasting and stronger high."
Shoppers look like they are already following that advice. LeafLink, a wholesale cannabis management platform, saw overall orders for edible products increase from 19.2% to 20.6% during the week of March 16. Since then, the category has maintained an average weekly market share of 20.7%.
420 holiday sales are a big boost to most companies top line. This earnings seasons has seen multiple companies pull back previous guidance and have warned investors to have lower expectations. Losing the 420 bump may make those second quarter goals even harder to meet.
It's All in the Delivery
According to a survey conducted by Ganja Goddess, before Coovid-19 67% bought their cannabis through delivery. That number has jumped to 84%. 44% of consumers say their usage of cannabis has increased since the pandemic began. That bodes well for increased delivery for 420. No one said you can't host your own 420 celebration at home with a marathon session of Cheech & Chong movies.
Driven Deliveries Inc. (DRVD) announced that over the last 10 days the company has experienced record growth and demand with a greater than 100% increase in sales. Following California's decision to deem cannabis deliveries an "essential business," Driven is increasing infrastructure to provide California customers safe access to legal cannabis through the government mandated quarantine.
"Driven Deliveries was founded on the bedrock principle of enabling universal access to cannabis to California's population," said Driven Deliveries' CEO Christian Schenk. "Driven is the only service that provides deliveries to 92% of California's population, giving millions of people access to on-demand legal cannabis from the security and safety of their own home during this very difficult time".
The Los Angeles-based cannabis delivery platform Emjay, said it has seen a 349% growth since California's shelter-in-place on March 19, 2020, and is now forecasting the biggest spend of the year on the 4/20 holiday as consumers flock to cannabis and embrace the unknown.
Schenk noted that delivery has emerged as the ideal way for consumers to get cannabis. He said it would be difficult for states that had not allowed delivery services prior to the virus to go back to business as usual once things clear up. Cannabis delivery will most likely be a staple to the cannabis industry country-wide moving forward.
Another way for investors to make a delivery trade would be to look at Halo Labs Inc. (AGEEF) and its recent acquisition of Cannalift Delivery. Cannalift is a software company that is developing an application to introduce a new and convenient method for obtaining cannabis products. The company said in a statement that the application will deliver any products from local dispensaries to consumers through an intuitive application and website, subject to regulatory approvals. It's a risky bet as Cannalift's build out isn't complete, but is ahead of schedule and is projected to be completed with initial sales and partnerships by the end of Q22020.
In an effort to be sensitive to the pain inflicted from the Covid-19 virus, many companies are offering 420 celebrations with a nod to giving back. Caliva calls its giveback initiative "It's a Joint Effort". The company is donating $4.20 from the sale of every Limited Edition Product to resources for essential workers. The company is also matching up to $10,000 in Silicon Valley Strong donations received through Caliva.com.
The biggest event looks to be Chronic Relief (www.farechild.com/chronicrelief) which is a free telethon live-web broadcast with 100% of all funds raised via donation given to Feeding America Covid-19 Response Fund (501c3). It will be uniting the global cannabis community in celebration of 4/20 by bringing entertainment, words of encouragement, and the giving spirit to those in need. Famed cannabis event producers Dave Tran and James Zachodni of Farechild Events, Seattle-based Atomic Studios, and cannabis branding agency Wick & Mortar, along with a host of partners are coming together to support those facing hunger as a result of the virus.
The Arcview Group plans to celebrate a decade of deal-making and watching cannabis go from illegal to essential in its 420 event. The company is even going to try a virtual consumption lounge. The agenda hasn't been set yet but it's sure to be enlightening.