More people are heading back to cannabis dispensaries. Indeed, the quick return to in-store cannabis shopping, even with restrictions, shows that the demise of brick and mortar is a myth.
Cannabis technology company Akerna Corp. (KERN) has already seen a shift in dispensary delivery as states begin to reopen. Akerna said that as stores begin reopening as states end the lockdowns, online cannabis orders and pickup as a fulfillment method have started to decline.
"The number of delivery orders skyrocketed in March and April, but in May we're seeing a shift back towards in person transactions. The average number of daily deliveries kept climbing through April but appears to be trending downward in the last two weeks, so we may have hit a peak," said Aryeh Primus, vice president of analytics, Akerna. "We continue to see that the in-store interaction between consumer and budtender is key for people purchasing cannabis, and delivery takes away that."
The company said that looking at the numbers relative to January 2020, before anything was affected by Covid-19, March saw a 220% increase in daily deliveries and that ballooned to 710% in April. Beginning March 14, Akerna said that the number of in-store purchases declined steadily, in some cases dropping by over half, presumably due to stay-at-home orders. However, now that states are reopening, more people are returning to dispensaries.
"When we saw the increase in alternate modes of fulfillment, like delivery and curbside pickup, our initial thought was that this might be a sustainable trend because of increased consumer convenience," said Primus. "There will likely be a long-term increase, but the April bump doesn't seem sustainable; at least some of the shoppers want to return to in person transactions. May deliveries are about five times what we saw in January, but that's a 50% reduction compared to the highs in April."
This could be unfortunate news for the companies that spent thousands on creating delivery services and updating software to accommodate online ordering. Although, if the dreaded second wave does occur, then these businesses will be well prepared.
Sales Increase in Pandemic
Despite some companies such as MedMen Inc. (MMNFF) , which reported its sales declined as a result of the Covid lockdowns, overall cannabis sales increased. The data from Akerna also showed that year-over-year, May 2019 to May 2020, recreational-order sales increased by 157% with an average ticket size of $77.73. The 30 - 40 age group had the strongest order sales growth at 103%.
As the industry evolves to meet customer needs, product pickup as a fulfillment method increased 141% year over year, accounting for 16% of order sales for 2020.
The increase in sales began in earnest in April as total cannabis sales increased 68% over April 2019, with an average ticket size of $123. Top categories according to Akerna were as follows:
- Concentrates increased 22%, accounting for 11% of total product sales
- Cartridges / Pens increased 3%, accounting for 35% of total product sales
- Infused Edibles decreased 18%, accounting for 9% of total product sales
- Flower maintained, accounting for 43% of total product sales
New Store Openings
Even though stores faced additional restrictions during the pandemic lockdowns, cannabis companies remained undaunted and continued to open new stores. Green Thumb Industries (GTBIF) announced that it would be opening its fourth retail location in the Las Vegas, Nev. area on May 13, as well as an eighth store in Illinois on May 28. This makes for a total of 45 storefronts nationwide for Green Thumb, with four new locations opening since the Covid-19 crisis began.
Cresco Labs (CRLBF) is also charging ahead with the opening of Sunnyside River North in the prestigious River North neighborhood of Chicago. Sunnyside opened for adult-use cannabis sales on May 28 for online orders and in-store pick up that day through a pop-up retail experience. It's the first recreational only dispensary to open in Chicago.
Cannasafe has announced the opening of three new ISO accredited laboratories in Oregon, Florida, and Illinois to help meet the increased demand for cannabis during the pandemic. While Canna Provisions has opened a new storefront in Easthampton, Mass. with another in nearby Holyoke slated to open shortly.
Will Curbside Continue?
Many states quickly pushed through changes to regulations to allow for curbside pickup during the pandemic and it isn't clear if those changes will remain in place. Prior to the pandemic, dispensary customers, depending on the state, were subject to various restrictions for entering and exiting stores.
So far there is no indication if dispensary owners will face an end to curbside pickups or changes to delivery options. The consumers, though, seem to have spoken. According to Akerna's early data, shoppers like perusing the shelves and want to return to their shopping trips at dispensaries.