MJBizMag January 2021 - 48

New Year, New Opportunities
Stimulus checks passed by Congress helped prop up spending last spring, even as employment levels were plummeting.
Spending fell more than 10% during
the second quarter of 2020, according
to a report from New York-based
consulting firm Deloitte, but it picked
up later in the year. In December,
Congress agreed on a new round of
stimulus checks as part of a $900 billion
coronavirus relief package.
The National Retail Foundation in
Washington DC, Fitch Ratings in New
York and Deloitte all predict depressed
retail spending in 2021. Such forecasts
partly reflect worries that millions of
Americans will be without work and
unemployment benefits in 2021, meaning
they won't be able to spend as before.
But cannabis consumers have so
far bucked that trend. " I think what
2020 proved to us is that the industry
is somewhat recession-proof, " said
Velazquez, noting that marijuana sales
remained strong during the pandemic.
" Remember that a relatively small
proportion of people are responsible for
most of the marijuana bought (in legal
markets), and those people will keep
buying, " said Robert Sonara, associate
director at the Bureau of Business and
Economic Research at the University
of Montana.
Indeed, a 2017 study by Washington
DC-based cannabis data-analytics
firm New Frontier and Denver-based
consumer-relationship management
firm Baker found that medical marijuana
patients spend about three times as much
as their recreational counterparts.
In other words, recreational cannabis
spending might be vulnerable to
decline, but the medical and die-hard
consumers who account for the
majority of sales will continue to
buoy marijuana retail.
Still, Velazquez warned, cannabis
retailers should worry about illicit
businesses siphoning off cash-strapped
customers in search of cheaper products.
" I think where we might see things
shift is whether consumers go to the
unregulated market, " Velasquez said.
48 Marijuana Business Magazine | January 2021
Retailers " have to understand their
consumers and what's driving them. And
they need to look at their customers
from a very local level and not just
a 30,000-foot level. " In other words,
changes in the local economy-such as
a major employer closing or laying off
workers-can impact the consumer base.
INTEREST RATES
A limited number of
banks and lending
institutions are willing
to service marijuana
businesses as customers. If the federal
government passes cannabis banking
reform in the form of the SAFE
Banking Act, marijuana companies will
increasingly be able to get loans from
government-insured banks.
While cannabis companies shouldn't
expect the same interest rates as
mainstream businesses-interest rates
for MJ companies can be several points
higher than those for mainstream

MJBizMag January 2021

Table of Contents for the Digital Edition of MJBizMag January 2021

MJBizMag January 2021 - 1
MJBizMag January 2021 - 2
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