State's Medical Cannabis Industry Feels Coronavirus Effects Despite Sales Boom

Arizona’s medical marijuana dispensaries sold about 17,000 pounds of cannabis in March amid the coronavirus pandemic, netting the industry the highest monthly sales numbers in its 10-year history, according to a report from the state health department.

But skyrocketing sales haven’t exempted the state’s medical marijuana program — of which dispensaries are but one part — from feeling the effects of the coronavirus on business, industry representatives say.

“We have a whole team of brand ambassadors that, unfortunately, we’ve had to furlough,” said Ian Makar, sales director for cannabis wholesaler Geoleaf Brands. “It presents a challenge that we can’t go face to face with not only the dispensaries and the budtenders, but also the customers out there as well.”

Makar and other leaders in Arizona’s $580 million-per-year industry spoke on the coronavirus’s impact on their businesses at a virtual town hall meeting organized by the Marijuana Industry Trade Association on April 22. While some panelists said booming sales and stay-at-home orders have boosted their growth and innovation, others said their current reality is more grim: frustrated patients, disrupted staff schedules, and furloughed employees.

Cannabis certification doctor Liz Valentine said her patients are “not happy coming in,” since many are vulnerable or immunocompromised, but still have to see a doctor in person to obtain a state medical marijuana card. Her practice, Green Star Doctors, has implemented social distancing guidelines like only allowing three patients in the office at once, but visitors are still frustrated at the risk involved with leaving their homes, she said.

“We have no other alternative for them,” she said. “So we do what we can. We’ve had a lot of tears, you know. We have a lot of concerns and worries.”

Valentine said a doctor on staff also quit, fearing exposure because she is both a cancer survivor and a caretaker for her elderly mother.

On the production side, Lilach Power, owner of the vertically integrated Giving Tree dispensary, said her cultivation team is still working full-time hours to keep up with high demand. But she has “staggered the workforce” so the cultivation team comes in earlier to avoid unneeded person-to-person contact.

For wholesalers like Makar, whose company produces K.I.N.D. Concentrates, social distancing guidelines and stay-at-home orders have meant missed opportunities to sell new product lines and introduce patients to their brands.

“One of our biggest business models is to really educate patients,” Makar said. But since his staff aren’t allowed in dispensaries that are operating largely on a walk-up, drive-thru, and delivery basis, those employees are furloughed and “on the back burner for right now.”

Edible brands, like Arizona company Baked Bros, have seen a rise in sales, but still have had to get creative to escape furloughs and layoffs. Baked Bros typically holds some 30 events per month, according to co-founder Nadeem Al-Hasan — but those have dwindled to zero in recent months.

“We’ve had to shift some positions around,” Al-Hasan said. “Anybody that was working the events is now either helping out in distribution or they’re helping out in packaging or they’re helping out in production. We’ve been able to find spots for them.”

As the way patients get their cannabis shifts, some sectors of the state’s industry — like banking technology firm Hypur — have benefited from the change. Tyler Beuerlin, chief revenue officer for the Scottsdale-based Hypur, said his company has used the time to develop a contactless delivery option, which has been rolled out in several states.

“We’ve been a huge beneficiary of this, which has been bittersweet,” Beuerlin said. “It’s been a huge windfall for us.”

Kim Prince of PR agency Proven Media said her team has also been “a lot busier” as companies shift their communication strategies amid the pandemic.

But marijuana companies that are struggling during this time face an added challenge — since weed is not federally legal, they are not eligible to apply for emergency stimulus assistance, like small-business loans, from the federal government.

Arizona’s pot industry leaders hope that changes with a bill proposed this week by U.S. House Democrats that would allow cannabis businesses to apply. In the long term, they hope that by remaining open as essential businesses during the coronavirus emergency, the federal government will reconsider legalizing pot.

“You have a situation now where the industry is deemed essential, and yet you have people incarcerated in prison,” Beuerlin said. “It completely goes against one another. This is such a great time to get loud about these issues.”