COVID-19's Impact on the Hemp Industry and Beyond

Illustration of cannabis plant leaves and 'CORONAVIRUS' in caps

The outbreak of Coronavirus 19, or COVID-19, has had numerous severe consequences for citizens and businesses across the globe. The World Health Organization officially dubbed the virus a pandemic last week, with numerous nations enforcing mandatory quarantines to keep their citizens safe. The virus has already claimed more than 11,129 lives to date, with 5,976 of these occurring in Europe and 3,432 in Asia at last count. Italy has been impacted most significantly, with more than 4,000 total coronavirus deaths, 627 of which occurred in a single day. At this article's time of publication, 276,479 cases of coronavirus have been confirmed - though the number of cases and fatalities are both expected to quickly rise.

In the United States, the Center for Disease Control has implemented the closures and restricted operations of numerous businesses throughout the nation, including cafes, bars, and restaurants. Schools have closed to mitigate the spread of the virus, some indefinitely or until Fall of 2020. Higher risk demographics like the elderly and immunocompromised have experienced increased fatality rates from the ongoing spread of the virus, making it essential for every citizen to act with their health needs in mind. Individuals throughout the United States have self-quarantined, leading to mass shortages of crucial supplies like water bottles, soap and toilet paper.

Leading researchers are working fervently to fully grasp COVID-19 and search for ways we can most effectively prevent the virus, and reduce its lethality once contracted. Meanwhile, a rising culture of fear and precaution has taken the United States by storm. Today, the DOW closed with the lowest numbers in eleven years. The implications of the stock market crash are a cause for major concern in a wide range of industries and those who rely on their stability and general success.

How Has COVID-19 Impacted the Hemp Industry?

Coronavirus is expected to impact industries across the globe immensely - and the cannabis and hemp industries are no exception. Businesses throughout the United States are bracing for the virus’s impact and doing all that they can to keep themselves afloat.

One major reason for that coronavirus may have consequences for the hemp and cannabis industries is their shared reliance on hardware which is manufactured almost exclusively in China. These shortages include the hardware necessary for vaporizer products, marijuana product packaging materials, and specialized equipment crucial to the processes of laboratory testing, extraction and more. Hemp material that’s routinely exported from China to the United States is expected to reduce in availability, leading to local shortages which could impact the processes of research, development and production.

Beyond the direct causes of COVID’s impact, financial losses are being felt universally by citizens around the world, with ripple effects of losses in profits, hours and even jobs felt by businesses and employees everywhere. These have also made investors and consumers unusually wary of new investments and purchases alike, contributing to a vicious financial cycle until the market regains stability.

What Factors Could Impact Industry Changes?

Nic Easley is the CEO of Denver, Colorado-based 3C Consulting. In a recent interview with the Hemp Industry Daily, Easley spoke to the COVID-19-related changes seen so far in the cannabis industry specifically and what they can expect going forward. “It’s a huge wake-up call,” explains Easley. “It’s forcing companies to look at their supply chain. ‘Where do my products come from? Do I have multiple options for vendors?’ Everyone was looking for the cheapest option forever, and that’s China.”

His predictions for the continued impact aren’t entirely promising. “It’s going to hurt everyone, especially low-cost crappy vape companies, hardware companies, anyone who’s undercutting big brands, anyone who does their manufacturing (in China) – it’s going to hurt all of them.”

Still, Easley notes, smaller hemp companies with local manufacturing may thrive despite these changes. Those willing to reconsider their outsourced production methods (and with the capital to do so) may not only hold strong beyond the end of the outbreak, but may serve as a source of American manufacturing jobs, eventually leading to a rise in local opportunities within both industries. In his words, “The biggest thing I see is finally a break for U.S. CBD companies and hemp companies to do something when they don’t have massive competition. It’s also a moment for smaller companies that have lost their market share to China to step up, ramp up, and focus on relationships.”

Hopefully, American-run manufacturing plants can step in to fill the gaps left by China’s pandemic-induced shutdowns as Easley has suggested.

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