Ask Our Experts: Canna-tourism Amid Coronavirus

May 3, 2020

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Q: As local markets are challenged even where they are deemed to be essential business, what are the impacts of COVID-19 shutdowns on canna-tourism?

A: Prior to the coronavirus outbreak, New Frontier Data projected the combined U.S. adult- use sales from all 11 legal adult-use markets to surpass $9 billion throughout 2020.

Source: New Frontier Data
Note: Projections were made prior to the coronavirus outbreak and resulting travel restrictions.

That, however, was then; this is now. After initial spikes in purchases as consumers prepared to shelter in place, national sales have generally plateaued, with the busiest legal markets in those locales permitting delivery services.

Since the post-pandemic introduction of nationwide stay-at-home orders and travel restrictions during March and April (with no clear end in sight), adult-use cannabis programs which rely heavily on tourism spending (e.g., Nevada), look to be especially vulnerable.

Nevada’s sales of adult-use cannabis were projected to reach $698 million for the year, driven mainly by sales from dispensaries clustered in Las Vegas which rely heavily on tourism traffic.

Now, New Frontier Data’s updated projections for the state’s annual sales this year have been decreased by 58% due to the impacts of travel restrictions.

Source: New Frontier Data

Nevada dispensaries operating throughout the shutdown are relying on delivery alone, though doing so without sufficient infrastructure to handle such large sales volumes solely through delivery. Additionally, cannabis businesses were disqualified for relief from the federal aid stimulus package, so most are struggling to remain operational.

While Nevada’s canna-tourism market is expected to be the one most keenly affected in the U.S., all the nation’s legal adult-use states are expected to experience sales declines due to travel restrictions.

Please look forward to more analysis in this space about updated state-level sales projections for key adult-use markets in Illinois and Massachusetts.