As Australia and the globe lockdown to battle the coronavirus, businesses requiring personal interaction are coveting the ‘essential service’ label.
If you receive it, you get to stay in business and pay your employees. If not, you need to shut up shop. And many of your employees may be dependent on the government’s new JobKeeper assistance package.
Medical facilities, grocery stores and electricity suppliers certainly get the essential services tick. But many businesses aren’t so black and white. And you’ll notice some big discrepancies in what is and isn’t deemed essential in different nations.
‘In some US states, golf, guns and marijuana have been ruled essential,’ says the Independent.
We have no qualms with that. Though we’d suggest you not engage in these essential activities simultaneously.
Nevada, New York and San Francisco are among the growing number of jurisdictions to label medicinal cannabis dispensaries essential services.
Should medical cannabis dispensaries be considered essential?
And they have the support of the majority of Americans. A poll by market research firm YouGov showed 53% of Americans think medicinal cannabis dispensaries should be given the essential business tick during the pandemic lockdowns.
But many states moved too late to stop the panic buying.
‘On March 16, sales of recreational cannabis were up 159% in California compared to the previous year, jumped 100% in Washington state and grew 46% in Colorado, according to data from cannabis analytics firm Headset Inc.’
And CNBC informs us that, ‘Average store revenue is up 52–130% compared with January at more than 1,300 stores using cannabis e-commerce platform Jane Technologies.’
The surge in demand has seen many pot stocks outperform the wider market over the past few weeks.
Aurora Cannabis Inc [NYSE:ACB], for example is up 48.8% since 18 March. Though even after that surge, the share price is still down 55.2% year-to-date.
Encompassing a bigger basket of cannabis stocks, ETFMG Alternative Harvest ETF [NYSEArc:MJ], is up 22.0% since 18 March. Though it’s also still down 44.7% since 2 January.
Clearly pot stocks haven’t been immune to the wider market sell-off. And for some, this could spell their end, taking investors’ money with them.
But when the world re-emerges from its virus shelters, well-positioned cannabis companies could enjoy some of the sharpest share price rebounds.
PS: While most every stock has come under selling pressure, The Rum Rebellion editor Vern Gowdie lists five stocks he believes you should consider selling immediately. You can find out which ones, and why, in his free special report here.