New study quantifies the impact of COVID-19, with 56% of executives moving marketing spend to online events and digital media and 39% planning to scale-back staffing.
Cannabis executives report slashing budgets and significant disruption to suppliers and services during the COVID-19 crisis, according to a new report published by Cannabis Business Executive (CBE) and cannabis market research firm High Yield Insights. Business-to-business transactions, already complicated by restrictive banking and finance regulations, have been further challenged as 45% of executives report issues receiving payments from customers.
Executives among a diverse cross-section of ancillary service providers and licensees entered the year with bullish expectations. Among licensees, such as cultivators, processors, and dispensary operators, an overwhelming 74% expected a year-over-year revenue increase along with 56% of service providers.
Several months later, in the midst of the pandemic roiling the country, forecasts have been slashed despite speculation that cannabis could be a “recession-proof” industry. While consumer demand remains high, executives are struggling to adjust to unprecedented business challenges in areas such as supply chains, which 63% report having been somewhat or significantly disrupted. Added to the pressure to nimbly adjust to preventative measures like social distancing, many companies have been forced to do more with less. Although 47% plan to maintain pre-COVID staffing levels, 39% of executives intend to reduce headcount.
“We surveyed industry executives early in the year looking for benchmarks on strategic issues like revenue forecasts and growth drivers,” says Mike Luce, cofounder of High Yield Insights. “I was excited to share the results in collaboration with Rob Meagher, CBE Press’s President and Editor-in-Chief. Gathering quantitative data on the perspectives and purchasing decisions of executives can be tremendously challenging. As we began analyzing the results in March, we saw an opportunity to deliver more timely value by also asking executives about the impact of COVID-19. By circling back with a second survey, we created a unique before and after look at the mindset of industry influencers and decision-makers. We hope the data combined with interviews by leaders such as Nancy Whiteman of Wana Brands, Kris Krane of 4Front Ventures, and Tom Siciliano of Elixinol informs difficult strategic choices executives are being forced to make.”
According to Meagher, “Prior to the COVID crisis, the cannabis industry was already dealing with a number of impediments to sustain its meteoric growth, including slow movement on federal policy, a capital shortage, and social equity concerns. When the coronavirus took hold, those challenges looked miniscule by comparison. This joint report provides a real-time snapshot of how leading industry executives are responding to the pandemic, along with hard data derived from our industry executive readership to provide concrete steps companies can take to survive this unprecedented threat. It also highlights the innovative and entrepreneurial spirit that is driving one of the, if not the fastest growing industry in the nation and abroad.”
CBE has done a number of custom research projects since we launched in 2015 to help our readers run their businesses better. Luce, began contributing a regular column to CBE a two years ago that focusses on his core competencies; brand strategy, consumer insights, market intelligence, and analytics to help our readers focus on those issues that drive consumer revenues for industry licensees. His company, High Yield Insights conducts exclusive, independent research on cannabis consumers and the cannabis industry, providing data-driven insights and fostering fact-based strategic decisions a nice match to our our editorial needs and we look forward to future collaborations with Mike and his team.
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