Cannabis sales surge, proving pot is pandemic-proof

EVERETT — Pot is turning out to be pandemic-proof.

Cannabis sales are surging since Snohomish County reported the nation’s first case of the coronavirus 10 months ago, pushing state excise tax collections from those purchases to their highest levels ever.

In May, the state took in $47.4 million, a whopping 43.8% increase from the same period in 2019. August receipts reached $50.3 million, a new high for a single month, and were 41% higher than the previous year.

Starting with April, collections for each month have been more than 20% higher than the same month in 2019. Because taxes are paid in the month following actual sales, the trend tracks back to the beginning of the pandemic.

“Cannabis sales have definitely increased since COVID happened. There’s a lot of off time for some folks,” said Luke Parise, a worker at Kushman’s Mukilteo shop, one of the firm’s three weed retail locations in the county. “It’s a fun recreational thing to do. There’s a lot of diverse people coming in, from 21 all the way up to 85.”

Holly Lynch, 37, of Mukilteo, said she is buying more cannabis these days.

“I don’t know if I want to say it’s becoming a hobby,” Lynch said. “It’s definitely something I’m leaning towards doing. It’s stress relief. I’m trying different kinds.”

A confluence of factors, including personal pleasure and de-stressing, is fueling the rise, say state and industry officials.

It helped tremendously that cannabis stores got to stay open as essential businesses when Gov. Jay Inslee issued his stay-home order to slow the coronavirus outbreak. Then came those federal stimulus checks which, coupled with pandemic unemployment benefits, provided individuals with unanticipated sums to spend.

For some customers, cannabis is needed for medical reasons or is considered a staple for home life. They want ample supplies and are stocking up with larger than normal purchases.

“Folks are coming, they’re buying and they’re telling us that they’re prioritizing cannabis products with other products that are essential, like toiletries and toilet paper,” said Josh Estes of Pacific Northwest Regional Strategies, which represents Kushman’s and other weed retailers.

Parise experiences it at the front counter, where business has been steady.

“At first people were thinking it might not stay an essential business, so there was that rush to stock up their stash,” Parise said.

And, generally, the customer base is expanding as the market blends into the private sector landscape.

State Rep. Strom Peterson, D-Edmonds, chairman of the House Commerce and Gaming Committee, said he was “a little surprised” by the amount of increased sales but attributed it to a maturing industry attracting customers who might otherwise seek sellers on the street.

“It is working and we are driving more and more of the black market out of business,” he said. “That’s a positive.”

Sales of spirits are up, too, this year. That’s not a surprise. Historically, liquor sales did not sink in a recession. This year, with bars and restaurants closed, people bought booze in stores.

There were 12 million liters of spirits sold in stores and 580,000 liters in restaurants and bars between April and June. From January to March, the numbers were 9.1 million and 1.9 million respectively, according to state revenue reports.

“We’re learning now that cannabis sales are proving to be recession-proof and, in this case, COVID-proof,” said Brian Smith, spokesman for the state Liquor and Cannabis Board.

Voters legalized the growing and selling of marijuana in 2012, and retail stores opened in July 2014.

From day one, the industry has experienced steady growth, becoming a vital stream of revenue for state coffers. It will generate close to $500 million in the fiscal year which ends next June 30, and it is projected to bring in $1 billion for the 2021-23 budget.

The state derives the most economic benefit. Under current law, only $15 million in excise taxes are doled out annually to cities and counties. Lawmakers set that as the cap, and local government leaders have lobbied unsuccessfully for a greater share.

Between July 1, 2019, and June 30, 2020, the last full fiscal year, sales across Snohomish County totaled $134.1 million and generated $49.6 million in excise tax collections. The state sent the county $1,049,887 out of the $15 million fund and $195,623 to Everett, which had five stores operating that fiscal year. The city council recently agreed to allow three more stores.

It would be nice to say the successful cannabis stores are generating revenue for the community, but with the current arrangement, it’s a misnomer, Estes said.

With the pandemic putting a crimp in budgets of cities, counties and the state government, it’s an issue that may not get resolved soon.

“That’s a conversation that happens every year. I certainly understand why we do need to look at the revenue sharing again,” said Peterson, a former Edmonds city councilman. “Right now, trying to share revenues is going to be a challenge.”

It is also a misnomer that cannabis store owners are raking in the dough, say some owners.

Supplying workers with personal protective equipment and complying with COVID-19 safety protocols are neither cheap nor easy. Marijuana is still deemed a serious drug by the federal government, putting federal pandemic funds out of their reach.

“Without a doubt, cannabis sales are up year-over-year and so are expenses in running retail cannabis shops,” said Stacey Peterson, owner of three Apex Cannabis stores in Eastern Washington and a member of the Washington CannaBusiness Association.

“Legal cannabis shops are ineligible for the federal relief funds — just as we are ineligible for normalized banking practices,” she said. “For retailers like us, the increase in revenue is significant and is balanced by the significant increase in costs of running shops in the midst of a pandemic.”

Meanwhile, back in Mukilteo, Parise thinks the holidays should bring another uptick in sales.

“It’s a great stocking stuffer,” Parise said.

A customer came in for edibles and joints to put in an advent calendar she was making.

“There’s all sorts of different fun ways to get high,” Parise said.

Herald Reporter Andrea Brown contributed to this report.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com. Twitter: @dospueblos.