The economy might be tanking, but hey, cannabis sales are on the rise and Denver-based Spherex is riding the wave.
“The dispensaries are starting to look like the toilet paper aisle,” said Dan Gardenswartz, CFO of Spherex, a company that produces cannabis concentrates and products, including a THC and CBD-infused sparkling water called Phyx.
Spherex isn’t the only one. Although stock markets around the world have been in turmoil, marijuana stocks actually outperformed the S&P the week of March 16 despite the pandemic or, presumably, because of it.
Despite shutdowns, lockdowns and shelter-in-place orders across the country, in many jurisdictions where cannabis is legal, including Denver, weed is considered an essential service, right up there with groceries, medicine and laundry. Dispensaries, like pharmacies, are allowed to keep their doors open.
It makes sense. People are stuck in their homes, anxious about what the economic future holds and looking for a calming distraction.
Spherex distributes its products through dispensaries, which people can either buy off the shelf or order in advance through the Spherex website. And it’s been hard keeping up with demand, Gardenswartz said.
Last week, Spherex sales were up 134% over their baseline – and that was on Wednesday, with two days left to go in the week and the weekend still coming up. Anecdotally, sales of its sparkling beverage were also up last week, although Spherex still needs to wait for hard data to come in from its retail distributors.
But that’s not to say there haven’t been disruptions.
Spherex is hustling to keep up with demand while simultaneously instituting heightened safety measures at its production facilities. Every employee has their temperature checked before coming inside – “like if you were trying to get into the White House,” Gardenswartz said – and wearing masks and gloves is mandatory. The company is carefully monitoring its vendors to make sure they’re following the same guidelines.
Safety is also a top priority in Spherex’s marketing.
Where there is chaos, there is opportunity, Gardenswartz said. But he stressed that coronavirus-related messaging can’t be flip – or insinuate that a company is benefiting from the crisis in any way.
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Although driving even more traffic into stores by promoting the benefits of cannabis makes sense on the surface, Spherex isn’t changing its messaging to capitalize off of or juice the increased demand and, frankly, there’s no need to. Product is flying out the door.
So, don’t expect any promotional emails from Spherex with subject lines like: “Bored? There’s never been a better time to smoke!”
“Our focus has been on a safety message,” Gardenswartz said.
“Obviously we want retailers and end consumers to know that we’re in business and that our product continues to be clean and potent,” he said, “but we also really want to make sure our customers are taking this seriously. It’s a balance.”
3/27/20: Story updated with additional detail on marijuana stock performance.
