Why The Coronavirus Pandemic Was a Breakout Moment for the Cannabis Industry

This article is part of Owning the Future, a series on how small businesses across the country have been affected by the pandemic.

“I expect this will be the first year Nevada does over a billion in cannabis sales,” said Nicolas MacLean, chief executive of Aether Gardens, a cannabis producer in Las Vegas. “And it happened on the back of what I think no one expected.”

Last March, the Strip went dark in its first total shutdown since the assassination of the Rev. Dr. Martin Luther King Jr. in 1968. In the ensuing weeks, Las Vegas became the layoff epicenter of the United States. With casinos closed, visitor volume dropped to a little over 100,000 in April 2020 from 3.5 million in January 2020. The decrease sent the state’s small businesses — including the cannabis sector — into a tailspin.

“That first week, the government didn’t differentiate between essential and nonessential businesses,” Mr. MacLean said. “Dispensaries went into panic mode, asking if they could send product back to us.” (Recreational marijuana is legal in Nevada, though only licensed dispensaries may sell it.) Inside Aether Gardens, a 120,000-square-foot space 14 miles off the Strip, Mr. MacLean and his staff marveled at their latest harvest.

“We’d spent the last year perfecting our flower,” Mr. MacLean said, “and we got caught in the middle of Covid with the best flower we’d ever had.”

At the time, the company was offering the Dosi-Woah, a calming strain in which the indica species is dominant, with buds in a mix of green, gold and bright orange. It also had Zweet Insanity, a strain rich in terpenes, the compounds responsible for the plant’s often powerful scent, with big, greasy blooms that provide a relaxing effect. Both varieties also deliver the high levels of the psychoactive compound tetrahydrocannabinol (THC) that hard-partying visitors seek. But with none of those customers in town, Mr. MacLean saw cannabis through a new lens: How could it help with pandemic-related stress and anxiety?

Apparently, quite a bit. Despite inconsistent public health orders from state and local governments about whether cannabis companies would be considered “essential,” the industry had a breakout moment during the pandemic. Legal cannabis sales in the United States passed $17.5 billion in 2020, a 46 percent increase over sales in 2019. For many Americans, stocking up on marijuana was as essential as stocking up on toilet paper. And the industry found a way to get it to them.

In Las Vegas, that meant engaging local residents. Five days after Gov. Steve Sisolak issued his first emergency declaration, the Nevada Health Response COVID-19 Risk Mitigation Initiative announced that licensed cannabis stores and medical dispensaries could remain open, but encouraged delivery business and social distancing. Mr. MacLean remembers lines of cars, five blocks long, waiting for curbside pickup. While Nevada businesses had always bet on tourism dollars, Las Vegas’s metropolitan population of two million year-round residents suddenly looked like a strong replacement-customer base.

“Locals are very discerning — they want something they aren’t going to find on the black market,” he said. “Especially when you are stuck at home, you’re paying more attention to things like terpene and cannabinoid profiles, on top of THC levels, bud structure and aroma, which is information you get when buying from the legal market. And last year, that played into our hand as a high-quality flower cultivator.”

To meet the growing demand, Aether Gardens built a new state-of-the-art greenhouse, which will deliver its first harvest this month. Tourists (and their discreet vape pens) are coming back, but Mr. MacLean doesn’t anticipate that local business — or the demand for premium flower — will go away anytime soon.

Oswaldo Graziani Lemoine, the creative director of the Florida-based company Fluent Cannabis Care, saw a similar demand for flower when the pandemic hit. But he knew exactly who was buying: the half a million or so Florida residents who hold medical cannabis cards. (Adult recreational use is not legal in the state.) The question was, how would Fluent manage retail during the pandemic?

“Florida is a place where mask-wearing gets political,” Mr. Graziani said, “so even though we were able to keep our 19 locations open, we incentivized online orders and curbside pickup.” That included deals like Silver Sundays (10 percent off for ages 55 and older), Student Saturdays (10 percent off with a student ID) and, throughout the week, 20 percent off express pickup (curbside pickup of online orders) for new customers.

“For us, it became less about the in-store experience and more about offering our customers deals and the ease of pickup,” Mr. Graziani said. As the company looks to future expansion, he is imagining stores that are exclusively for express pickup: no lobby, no counter, just preorder and drive-through.

“If you don’t like roadblocks thrown at you all the time, like a video game, this is not the industry for you,” said Meg Sanders, chief executive of the Massachusetts-based Canna Provisions. In March 2020, the hurdles came fast and furious. Though recreational marijuana use is legal there, Massachusetts is the only state to distinguish between medical cannabis distributors and adult-use retailers, which meant that dispensaries like Canna Provisions had 48 hours’ notice to shut down.

“To have liquor stores deemed essential and not adult-use cannabis — especially when the law passed in Massachusetts was about regulating cannabis like alcohol — was surprising and unfortunate,” Ms. Sanders said. After paying all of her employees for an additional two weeks and coming to terms with the fact that the cannabis businesses were not eligible for Paycheck Protection Program loans, she took a hard look at her business model and began to sketch out a way forward.

“We immediately understood that our way of interacting with our customer would have to change, Ms. Sanders said, describing the focus at the Canna Provisions dispensary in Lee, Mass., as education-focused personalized service. Located in the heart of Berkshire County, where nearly three million visitors come every year for leaf peeping, skiing and picnicking, “our store is very much part of the experience,” she added.

In contrast to the traditional deli-counter-style dispensary, Canna Provisions has thrived on interactive, guide-led group shopping. “Our average customer age is 50 or over,” Ms. Sanders said. “They have questions, they want to learn, they don’t want to feel rushed because there is a line growing behind them.” Prepandemic, Canna Provisions had as many as eight guides on the floor at a time, educating groups on topicals, brownies and prerolled joints. But during the pandemic, that atmosphere of weed-focused learning vanished.

“Picture that transaction in a parking lot, with two people wearing masks, six feet apart, and it’s just not the same,” Ms. Sanders said.

Canna Provisions faced another obstacle when it eventually reopened, with limited curbside pickup, two months after the shutdown. “Our county is an internet desert, so we had to help people that didn’t have access or didn’t have the computer skills they might need to preorder online., Ms. Sanders said. Facing this reality, she transferred her operations to telephone orders to preserve the human and educational touch that customers had grown comfortable with.

When clients call Canna Provisions, the first voice they hear is that of an adept bud tender — sometimes Ms. Sanders herself — who guides them through the shopping experience. From suggesting strains — like the locally grown Stardawg (Corey Cuts) Smash Hits, a relaxing and uplifting hybrid with “a tendency to turn philosophical,” as the company’s website puts it — to processing the order, each phone guide provides the same dedicated attention that clients would experience at the shop.

“And it’s working,” Ms. Sanders said. “In our Lee store, preorders have become almost 100 percent of our business, so we bought more handsets and hired more people to answer the phones, and our revenue is up.”

When Covid restrictions for retail operations eased last summer, Canna Provisions opened its second shop, inside a 150-year-old brick paper mill in Holyoke, Mass. At the new 4,000-square-foot location, Ms. Sanders and her team can once again offer their guide-led customer-service experience. She described the way cannabis tourists explore the space and take in all the curious design elements: antique rubber stamps, reclaimed metal signs and the figurine of a T. rex smoking a joint.

“We set out to make a destination,” she said. “And we nailed it.”