LOS ANGELES – The New York Stock Exchange (NYSE) on Tuesday saw the greatest one-day gain since 1933 (in the midst of the Great Depression), as Wall Street anticipated approval of the trillion-dollar COVID-19 stimulus package, which might stave off destruction of entire economies, industries, and markets around the world.
For investors and traders, the ride is staring to feel like being on a cruise ship adrift in stormy seas, driven by sentiment based in fear of mortality itself, as the U.S. seems to be about to experience the epicenter of the coronavirus pandemic, which according to health officials has yet to crest.
Confusion reigns for many small businesses, including CBD businesses; employees are being furloughed and laid off, the wholesale supply chain may suffer the effects of increased demand and less ability to service routes while short-staffed due to the outbreak, and the future is unclear.
Spot price index Hemp Benchmarks posted a report about the potential effects of the coronavirus crisis on the hemp industry. The report highlighted difficulties with the supply chain, affecting hemp cultivators and processors. Product containers, like jars and bottles, have been in short supply since the pandemic has slowed trade, especially from China.
The report quoted a statement from cannabis packaging company KushCo’s Chief Operating Officer Rodrigo de Oliveira:
“With the recent coronavirus outbreak, our business was briefly and minimally affected by temporary [Chinese] factory shutdowns, production delays, and product shortages,” he said. “Fortunately, we entered Chinese New Year with healthy inventory levels, whereas some of our peers who don’t have the same scale, resources, supplier relationships, or inventory quickly ran out of product. Overall, we’re pleased to see the situation slowly improving and for new shipments to make their way into our warehouses again, from which we can accelerate our sales again.”
Tradeshow schedules also have been disrupted, the report said, including the 7th annual NoCo Hemp Expo; usually held in Denver in March, the event has been postponed to August.
Hemp Benchmarks also speculated about whether CBD retailers would be considered “essential services,” as cannabis dispensaries and retailers in several states have, allowing them to do business under “safe at home” protocols being used to curb the coronavirus spread.
In mid-March, the U.S. Food and Drug Administration (FDA) added Idaho-based herbal product company HerbalAmy.com to a federal health-fraud list in relation to sales of a purported coronavirus treatment. According to news site IdahoStatesman.com, the company was marketing a “coronavirus protocol,” which included tinctures and tea, and priced at $155.00 on the company’s website.
One company is promoting its back-to-nature event as relief amidst the pandemic. “The novel coronavirus is causing unprecedented disruption and wreaking havoc on markets so these are challenging times,” said Bruce Perlowin, chief executive officer for Las Vegas-based hemp product manufacturer Hemp, Inc. in a press release. “However, I do believe we will, collectively, recover and overcome these challenges by moving back to nature and considering the eco-friendly solutions that have been previously dismissed.”
“People are panicking, especially in densely populated cities. Our Veteran’s Village Kins Community has plenty of space where social distancing wouldn’t even be an issue during our Hempathon,” Perlowin said, touting the event’s environmental resources.
To add insult to the economic injury caused by the pandemic, business stoppages are bound to result in legal proceedings. Hemp producer Third Wave Farm on March 24 filed a motion in federal court to void a contract they said couldn’t be fulfilled due to the coronavirus crisis, according to legal news site Law360.com.
The deal, which was struck with Oregon-based Pure Valley Solutions in May 2019 is an agreement for Third Wave Farm to act as a broker for CBD oil produced by Pure Valley Solutions, but now is impossible to complete as originally agreed.
Third Wave Farm is invoking force majeure, a contract clause that is used to protect against liability in the event of conditions that “could not reasonably have been foreseen or provided against.” The company said that neither party can complete their obligation under the contract.
The company is asking the federal judge to void the contract, while Pure Valley Solutions has taken counteraction and is asking Third Wave Farm to pay $9 million in interest and storage fees.
In Texas, where pandemic restrictions, or lack thereof, have made controversial headlines, the Texas Hemp Industries Association (TXHIA) has issued an open letter to “Texas City Councils, Mayors, and County Judges, Representatives, Congressman, and Senators,” requesting that hemp and hemp businesses be given “essential infrastructure” status.
“Hemp products like hemp grain, hemp seed oil, protein powder, food, beverages, salves, and tinctures can be purchased at grocery stores, convenience stores, and pharmacies that are designated critical infrastructure. Shutting down hemp businesses will not reduce the need for the critical products many customers have grown to rely on to aid a multitude of different, human and animal, related health issues (epilepsy, MS, Parkinson, arthritis, pain, anxiety, sleep). Shutting down hemp businesses will increase the risk of greater infection for those that will be going to high traffic, overburdened, grocery stores to seeking these products,” the hemp trade organization said in a press release.
“If a store focused on selling bananas and other foods and beverages, those businesses wouldn’t be shut down in this situation. We request that our business members be treated like all other critically designated grocery stores, convenience stores, and pharmacies,” the organization added.
Massachusetts-based CBD contract manufacturer High Purity Natural Products announced it has changed operations to begin producing hand-sanitizer products to meet growing demand during the coronavirus crisis. The company said it will offer the hand-sanitizer—with or without CBD—to retailers, hospitals, food companies, or anyone who needs large quantities, in containers ranging from 1.5oz to 55 gallon drums.
“We have seen what is going on out there, customers are providing incredible demand for this product. We are happy to help so many people stay healthy during these troubling times,” said High Purity Chief Executive Officer Mike Matton.