Coronavirus in Oklahoma: Marijuana dispensaries roll without a rescue
No federal help is on the way for medical marijuana businesses, so the fledgling industry in Oklahoma is finding its own way through the coronavirus pandemic and economic crisis.
"We've had to look at taking cost-cutting measures and increasing our solvency on our own," said Corbin Wyatt, CEO of Likewise Cannabis, which has dispensaries at 6808 N May Ave., 1609 N Blackwelder Ave., and in Edmond, Stillwater and McAlester. "All upper management took a temporary voluntary pay decrease amongst other cost-cutting measures."
For medical marijuana, any road to recovery by way of a Small Business Administration loan or any other federal rescue is blocked by one stark fact:
"Because the cultivation and sale of marijuana is illegal under federal law, marijuana businesses and certain ancillary businesses are not eligible to participate in many of these programs ... even though cannabis businesses are as equally harmed by the coronavirus pandemic as other law-abiding, tax-paying small business operators," according to Vicente Sederberg LLP, a Denver law firm specializing in cannabis law and policy.
After this week's allocation of another $310 billion for the SBA-run Paycheck Protection Program, with no provision for marijuana, the National Association of Cannabis Businesses asked Congress to rectify what it calls a double standard.
“We are extremely disappointed that Congress again excluded legal cannabis businesses and thousands of their hardworking employees from the benefits of this legislation. The deepening recession is affecting cannabis industry employees in agriculture, manufacturing and retail sales in over 60% of America. They are suffering like everyone else and should be treated like everyone else,” said Gina Kranwinkel, CEO of the trade group, based in Washington, D.C.
Industry leaders seek "financial relief, relaxed banking privileges and equitable tax policies," said Mark Gorman, executive vice president and head of government affairs for the cannabis association.
In the meantime, the marijuana business, while toned down like everything else, continues, mostly at curbside and increasingly online.
Industrywide economic effects amid the pandemic remain to be seen. During the month of March, as the outbreak began shutting down many businesses across the state, Oklahoma saw a record high for tax collections on medical marijuana.
April tax collections won't be known until the beginning of May.
Likewise Cannabis took steps to cut operating expenses 27.5% "without overly putting the financial burden on our team members and to help us stay more liquid," Wyatt said. "We also recognize that this is a hard time for our patients who may not be able to afford their usual medical cannabis regime, and we've been exploring ways to further our ability to help them as well during this tough time.
"Our No. 1 goal as the market began to suddenly shift was to not have to lay off or terminate any of our team members. Instead, we began shifting business operating hours to allow team members to get the hours needed to stay financially solvent while decreasing our late-night hours to close at 9 p.m. Patient traffic went from being fairly high between 9 p.m. and 1 a.m., from the late-night crowds getting off work, to being a handful of people at most."
Wyatt said the pandemic and changed behavior caused by health safety concerns changed dispensary inventory.
"We've shifted into carrying more products with longer shelf lives and increased the number of budget-friendly cannabis flower strains and processed goods that we carry to account for the economic downturn," he said. "There has been a transition from patients who generally purchase higher-end and Sativa cannabis products, the ones known for higher energy levels and daytime use, to a drastic increase in those purchasing the more budget-friendly and Indica strains, those known for being more relaxing and relieving and better for nighttime use."
User behavior has changed, too.
The two Likewise Cannabis locations with drive-thrus — at 6808 N May and in Stillwater — have had huge jumps in traffic, and online ordering nearly doubled at the N May site, Wyatt said. People are making less frequent purchases, he said, but they're buying more at a time.
He said it's put a crimp in dispensary style.
"Cannabis has a strong social aspect to it and there are many patients that enjoy stopping by the dispensary to discuss new flower strains and cannabis products with our budtenders. On average, we generally see repeat patients between three and four days," he said.
"The coronavirus pandemic has increased that time to an average of seven to nine days, but the average ticket sizes have increased by 30% with a 45% increase in the number of items being purchased, which tells us that our patients are purchasing more items at a time that are on the more affordable end of the spectrum."
Wyatt said he sees the coronavirus having two longterm effects on the cannabis business.
"The first will be a continued increase in the number of patients utilizing cannabis products like edibles, topicals and tinctures that do not require inhalation. Most of these product purchases will be targeted towards aiding in ailments like anxiety, depression and insomnia," he said. "The second will be a shift from using lobbies to view cannabis products towards a more in-depth online menu system that allows patients to view products in greater detail.
"I imagine we'll be seeing online menus that feature more in-depth views of cannabis products as well as 360 views of flower buds, edibles and more as patients choose to shop less in the store and more online."