March 2020 may be remembered as a potential turning point in history. Canada and the United States both committed to large-scale lock downs in response to the COVID-19 outbreak. U.S. and Canadian indices surrendered years of market gains in a span of a few weeks.
Many investors have been on the hunt for defensive stocks to protect their portfolios during this rout. For a moment, the cannabis sector appeared to be receiving a much-needed bump in early March. Sales in the United States and at top online cannabis stores in Canada were way up.
Unfortunately, this momentum has petered out in recent weeks.
In the United States, adult-use cannabis sales peaked with sales that were up in California, Washington State, and Colorado with an average percentage increase of 101% year over year. However, at the end of the month only California had posted a year-over-year increase of 9% in the final days of March.
The story was similar in Canada. Stores saw their inventories fall sharply due to the customer rush, but demand has normalized quickly in the last weeks of March.
Canopy Growth (TSX:WEED)(NYSE:CGC) and Aurora Cannabis (TSX:ACB)(NYSE:ACB), the top two producers in Canada, posted a promising increase in net sales in the month of March. The news is not all bad, though.
Canadian and U.S. governments have indicated that the shutdown could go on for months, which means that cannabis stores may see consistent spikes in activity as consumers look to stock up while they hunker down.
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