Despite being illegal under federal law, cannabis has been legal in a number of states for a while now. Advocates for legal cannabis can talk about the benefits of legalization for days, but one of the main benefits has always been the potential for tax revenue. Like alcohol, the demand for cannabis is almost constant, and states that have legalized it have the potential of earning millions in sales revenue.
Arkansas’s first dispensary opened in May last year, and nearly $75 million and 12,000 pounds worth of medical marijuana has been sold since, according to the Arkansas Department of Finance and Administration. What’s noteworthy is that nearly half of the sales have been in the last two and a half months.
Roughly 40% of overall sales have occurred since March 1, 2020, with marijuana dispensaries selling $29.92 million since the coronavirus crisis began in March. “To put this in perspective, it‘s been one year since the first dispensary opened in May 2019 and 40% of the total sales for the year have taken place since March 1,” says Scott Hardin, Director of Communication at the Arkansas Department of Finance and Administration.
“We anticipate that the significant increase in sales over the last two months is directly related to COVID-19. When the CDC recommended citizens maintain at least a two week supply of prescription medication, it looks like medical marijuana patients in Arkansas took action on that guidance beginning in mid-March.
There was initially an assumption it may be a one-time spike but that has not been the case. Sales have remained extremely strong since that time,” says Hardin.
Dispensaries are also reporting that more patients are consistently making the maximum purchase, 2.5 ounces every 14 days. “Considering the price averages just below $400 an ounce, the maximum purchase may be more than $1,000 every two weeks.”
The state is home to 22 medical marijuana dispensaries, and another 11 are set to open over the next several months. According to Hardin, projections are for sales to exceed $100 million.
Aaron Crawley, owner, and CFO of The Source, a Bentonville-based dispensary, says the spike in sales is definitely related to the coronavirus outbreak. His dispensary was first opened on August 15 and has sold 977.73 pounds of medical marijuana. Due to current circumstances, the dispensary has rolled out a couple of health measures.
“Due to high demand and adherence to social distancing requirements, we’ve switched exclusively to online ordering and a maximum of three individuals in the lobby at a time. To accommodate high volumes of guests safely we have them check in with their names and wait in their cars until their order is ready. Even so, the majority of our guests are simply grateful that we’re open.”
Industry watchers say this strong trend of cannabis sales is good news to other players in the sector like The Supreme Cannabis Company Inc. (TSX: FIRE) (OTCQX: SPRWF) who believe the industry can be the key to reducing the adverse effects of the economic downturn during and after the coronavirus pandemic.
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