As the novel coronavirus COVID-19 continues to spread around the globe, hemp business insiders have differing opinions on how the crisis is likely to affect the industry. China, where the outbreak began, is the world’s largest producer of the crop and the country also manufactures much of the vape hardware and packaging for both CBD and THC products used in the United States. But with much of the country on lockdown and transportation networks purposely on hold to slow down the spread of the virus, many firms in the U.S. are now reassessing their sourcing strategies, according to Nic Easley, the CEO of Denver-based 3C Consulting.
“It’s a huge wake-up call,” said Easley. “It’s forcing companies to look at their supply chain. ‘Where do my products come from? Do I have multiple options for vendors?’ Everyone was looking for the cheapest option forever, and that’s China.”
Easley told Hemp Industry Journal that although some hemp companies may not be affected by the crisis, reliance on the global supply chain will mean that most businesses in the industry will see negative effects.
“It’s going to hurt everyone, especially low-cost crappy vape companies, hardware companies, anyone who’s undercutting big brands, anyone who does their manufacturing (in China) – it’s going to hurt all of them,” Easley said.
“Any kind of hiccup in that supply chain on their end allows American farmers to get into the international market, and it helps limit the flood of cheap Chinese CBD that is coming into America.” -Landin Butterfield
Jasen Russell, the founder of Southern California-based hemp clothing and accessories online retailer Hempzoo, said that he has seen some disruption in shipments of products from a supplier in China. Even though the factory is far north of the outbreak’s epicenter in Wuhan, many towns experienced quarantines that required manufacturers to obtain special permits from the government to operate. Although the process took some time to navigate, Russell reports that the factory is back online and his employees have not been affected by the slowdown.
Coronavirus Fears Impacting Travel
Fears over the safety of travel are also impacting how companies in the hemp industry are doing business. Many CBD companies were planning to attend the Natural Products Expo West in Anaheim, Calfornia the first week of March, but cancellations from exhibitors and attendees led organizers to postpone the event indefinitely.
“As with all our events, it was the intention here at Expo West in Anaheim, to follow official guidance from local authorities and to listen to the voices of the community we serve and support, in order to maximize the health of the industry,” said Fred Linder, group president of New Hope Network, in a update issued to all participants on March 2. “Today, it is clear the majority of those voices are saying they want Expo West but not this week. And so we are being guided by that majority in postponing the show.”
Jessica Bates, the founder and CEO of Moon Mother Hemp in Colorado said that she was packed and ready to travel to Anaheim when she heard that the convention had been canceled. But despite the loss her company will incur from the cancellation, she told HEMP in an email that she agrees with the decision.
“We have lost a few thousand dollars in logistics and printed materials as well as missed opportunities with buyers that a brand of our size does not otherwise have access to,” she said. “As a wellness brand, we do, however, support New Hope’s decision to postpone the event until it becomes safer for the community to convene in such a way again. Our top priority is the health of our community.”
Arguably the world’s largest hemp expo, NoCo, was scheduled to happen at the end of March in Denver, Colorado. However, amid corona concerns, officials opted to postpone the event earlier this week and reschedule it for the beginning of August.
But not everyone believes that the coronavirus epidemic will necessarily mean bad news for hemp. Landin Butterfield, a crop consultant with Patriot Hemp Services of Klamath Falls, Oregon, said last month that the outbreak could actually benefit U.S. growers because of China’s dominance in the market.
Whatever the impact on the hemp industry, the human toll of the coronavirus can not be discounted. To date, more than 100,000 cases of COVID-19 have been confirmed worldwide, leading to nearly 3,500 deaths.