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Here's How Marijuana Companies Are Thriving in the Coronavirus Pandemic

By Eric Volkman - Jan 21, 2021 at 2:00PM

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It's been a struggle, but they have advantages that companies in other sectors don't enjoy.

There is a certain type of marijuana company that has been particularly resilient during these extremely trying days of the coronavirus pandemic. Longtime Motley Fool contributor talks about a weed business segment that has held on rather well in this conversation, recorded Dec. 22, with Healthcare and Cannabis Bureau Chief Corinne Cardina Jurney during that day's edition of Motley Fool Live.

 

Corinne Cardina: Let's talk a little bit about how [the coronavirus] has impacted the cannabis sector. I think a lot of us were pleasantly surprised that most medical dispensaries were considered to be essential businesses during those initial shutdowns. But have any pot stocks been especially resilient during the pandemic that you think are a good sign for those companies?

Eric Volkman: Yeah, the retailers. You mentioned medical dispensaries, but also recreational dispensaries in most of the states that have legalized recreational. They were also deemed to be essential businesses, which was a very interesting -- to me unexpected -- move. It makes sense, I just didn't expect local and state authorities to be that generous.

Cardina: Liquor stores are also considered essential in that category of coping mechanisms.

Volkman: Exactly. It's the same theory. You want people to get drunk and high and forget that this awful thing is happening. The companies that are more focused on the retail segment weathered the storm a little better.

It's hard for anyone involved in retail because simply, whether your store is allowed to open as an essential business or not, people are just not going out. They're not going to stores, they not looking in windows and browsing and coming in -- "oh, I'll buy that!" -- it's much more purposeful and targeted and directed.

But the fact that [retail] was a lifeline for a lot of these companies and business was pretty good in a lot of places. I live in California, in Los Angeles we have a clutch of recreational dispensaries here and just casually driving by them, I wouldn't say they were always busy, but you would see what passes for a crowd these days. People social distancing outside, waiting to get inside. So you're having people who are using weed as a coping mechanism and quite a few companies posted decent quarter-on-quarter growth throughout the year. I don't have any examples to hand, but they've tended to be either very heavily retail-focused or have a strong retail arm.

I think that's going to continue. I think anybody who's used weed as you say, as a coping mechanism is going to continue to do so. Lights are going to continue to be on. And especially now with these other states coming onstream, you're going to have more business generally -- the retail pot business -- is going to expand. For that segment, for the retail-focused segment, I'd expect decent growth numbers to continue, if not in the double digits, at least some pretty decent advancement.

Cardina: Sure thing. One stock I know I've looked at and how it behaved in the pandemic was Planet 13. They have a superstore of cannabis on the Vegas Strip. Obviously, Vegas tourism was totally crushed, but they were able to pivot to delivery and do really well there. So they made a lot of inroads with local residents -- that's probably likely to stick around. That is definitely one to consider.

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