|
Below is a complimentary excerpt from a recent institutional research note written by our Cannabis analysts Howard Penney and Daniel Biolsi. If you are an institutional investor interested in accessing our research email sales@hedgeye.com |
Source: Hinterland co
Cannabis demand has remained strong during the COVID-19 period.
One of the industry’s biggest questions is how demand will be impacted in a recession. However, the sales trends in each state paint different pictures. California has seen robust sales growth in 2020, but a marked deceleration in April.
California’s market has several challenges, including local municipality rules, high prices, and a significant illegal market that make it difficult to extrapolate. Nevada has seen sales decrease in March and April (-2% and -26%, respectively). Nevada had a big component of demand from out of state tourists which have effectively disappeared with the stay at home restrictions.
Colorado and Washington were the first states to legalize adult use of recreational marijuana in 2014 and are mature markets. Washington’s market is locally driven, while Colorado has a large tourist component, which can explain the divergence in trend between the states in March and April.
In newly approved states like Illinois, demand has remained robust. Illinois reported April as the second strongest month this year since recreational use was approved on January 1.
Source: Headset, MBD
Trends have remained relatively stable in the most recent two week period, which should reflect demand without stockpiling as seen in the following chart:
Source: Headset, MBD
