A brief surge in recreational marijuana sales seems to be falling off sharply. Data compiled by consultancy firm Headset and reported by Marijuana Business Daily indicates that sales in the category fell on a year-over-year basis in both Washington State and Colorado on the last day recorded for March. California registered an increase on the last day tracked, but this was only 9%.
That's low when compared with levels seen in all three states in the middle of the month, when many stay-at-home mandates were imposed in order to mitigate the spread of the coronavirus. On one particular day during that period, California sales rose 159% against the same day in 2019, while Washington's increased by 100%, and Colorado saw a 46% gain.
This data suggests that after a very brief period of stocking up, recreational marijuana users are sufficiently supplied. Additionally, in numerous locations, cannabis dispensaries have been deemed essential businesses and allowed to stay open; customers might feel less urgency to buy product because of this.
Finally, states that benefit from "weed tourism" are probably suffering from the near-stoppage of travel activities. Colorado falls into this category, as it is bordered by seven states that have not yet legalized recreational cannabis.
This news is not particularly encouraging for marijuana stock investors. Many pot companies are connected to the three covered states, including Cresco Labs (OTC:CRLBF) and Innovative Industrial Properties (NYSE:IIPR). Last year, Cresco completed the acquisition of California distributor Origin House, while Innovative holds properties in both California and Colorado.
On Wednesday, the shares of both Innovative and Cresco fell harder than the broader stock market, with the former declining by over 9% and the latter by almost 12%.