Cannabis Project Newsletter - March 31st, 2020
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What Happened in March?
By Austin Bernstein
As we head into the third week of our new normal, the nation’s resilience and agility are on full display. From the public sector, state and local governments have to balance slowing the spread with maintaining economic vitality and keeping consumers and patients within the regulated marketplace.
The attached chart provides a high-level overview of how state executive orders in the ten retail market states and the District of Columbia treat cannabis businesses. A majority of states declared medical and adult-use cannabis businesses as “essential” with variation on the method of delivery. Certain orders limit sales to delivery or curbside pickup, while others permit business as usual.
This chart will expand over the coming weeks to keep up with the evolving times.
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For a complete listing of all state executive orders, visit the Marijuana Policy Project's website
here
.
From the private sector, industry research groups BDS Analytics & Headset report that sales spiked on the Mondays following state and local stay-at-home orders. Anxiety, isolation, and boredom are all possible contributing factors leading cannabis consumers to spend more per shopping trip and shop more frequently. Other reports, however, indicate cannabis sales are slowing down.
All this begs the question: is cannabis a recession-proof good, similar to alcohol and tobacco? It is still too soon to make any long-term economic conclusions.
Additionally, the latest announcement from the Small Business Association to withhold stimulus aid to small cannabis business has many in the private sector crying foul. With the social distancing guidelines extended to April 30, the AG Alliance will continue to monitor developments in state law and policy.
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Summaries by Cole White & Ricardo Balderrama
Illinois Governor Designates Cannabis as Essential Business
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In the state’s stay-at-home order issued on March 20th, Governor J.B. Pritzker ordered all non-essential businesses to cease operation beyond minimum basic operations. Specifically included as an essential business, however, was licensed medical cannabis dispensaries and licensed cannabis cultivation facilities. Several states have taken a similar approach, designating medical and or recreational cannabis as essential business. Click
here
to read the Governor’s order, and check out our chart above on the status of cannabis in each state.
Nevada Governor Orders Dispensaries to Sell via Delivery
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Governor Steve Sisolak issued an order on March 12th that requires cannabis dispensaries to operate by delivery only beginning on March 20th. The state has about 40 dispensaries that currently provide delivery services, but new virtual inspection protocols implemented by the Department of Taxation will allow all dispensaries to make sales via delivery. Click
here
for more info, and click
here
to read the Governor’s order.
Pennsylvania Temporarily Removes Patient Cap for Caregivers
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In Pennsylvania, dispensaries are considered life-sustaining businesses. The COVID-19 pandemic has forced the state to implement new provisions, and temporarily suspend some others, ensuring access to medical cannabis for patients. Some changes include allowing dispensaries to sell via curb-side delivery, and removing the limit on the number of patients that one caregiver may see. The statutory and regulatory suspensions would stay in place until the pandemic subsides, but until then providers should continue to help patients to the best of their abilities and as circumstances allow. Click
here
for more info.
Massachusetts Allows Telehealth for Cannabis Patients
- The Cannabis Control Commission (CCC) in Massachusetts has authorized a new procedure for healthcare providers to help medical cannabis patients receive their medicine while maintaining compliance with the state’s social distancing order. The CCC will allow providers to fill out a waiver request form to use video calls (telehealth) to help patients. Providers will be asked to guarantee the same level of care as an in-person service delivery, including validating identity and credentials. This order will be terminated once the states stay-at-home order ends, and procedures will return to normal. Click
here
for more information on the bulletin sent out by the CCC.
Cannabis Reform Stalls in New York Amid COVID-19
- In light of COVID-19, cannabis reform has stalled in several states that were previously racing towards legalization. In New York, Gov. Andrew Cuomo was working towards a cannabis reform package with Sen. Liz Krueger, but right now Sen. Krueger believes cannabis reform is unrealistic for New York. Sen. Krueger stated that she is willing to wait on cannabis reform until after the crisis has subsided to create a solid foundation for legalization. Click
here
for more info. Early reporting of a
draft summary
of the Governor's budget suggests that cannabis legalization will not be included.
Maryland Issues Social Distancing Requirements Specific to Cannabis -
On March 17th, the Maryland Medical Cannabis Commission issued new social distancing requirements for cannabis dispensaries. The order requires licensed businesses to ensure that all individuals maintain a distance of six feet from each other and limits the number of individuals in a waiting area to the amount at which the six-foot distance can be maintained. Several states have taken a similar approach, designating cannabis dispensaries as essential but limiting their operation to maintain social distancing. The order also requires that all frequently touched surfaces be regularly cleaned and disinfected, and places a moratorium on deli-style sales and the use of sniff-jars. Typically, dispensaries use sniff-jars as a way for consumers to get an idea of the smell and quality of a certain strain before they purchase it. Click
here
to read the commission's order.
Oregon Attorney General Cracks Down on CBD Advertising
- A CBD Store in Portland was recently asked to remove an advertisement for what the Oregon Attorney General perceived as a potential violation of the Unlawful Trade Practices Act. Specifically, the store had erected a sign which seemed to suggest that CBD could be used to combat COVID-19. While CBD is currently used by millions of Americans to treat a wide range of symptoms and ailments, the FDA has continually warned businesses against making unsubstantiated medical claims about CBD. A statement from the Oregon Attorney General concluded that “Unfortunately, the message is simple: There are no known cures for COVID-19. Please don’t try to sell something that suggests there are!” Click
here
for more info.
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Summaries by Cole White
The DEA Proposes New Rule to Increase Cannabis Research
Only one facility at the University of Mississippi is currently allowed to cultivate cannabis for federal research, and this has led to wide gaps in information on how cannabis effects the human body. On March 23rd of this year, the DEA published a proposed rule change which would significantly increase the amount of cannabis available for research.
Pressure to comply with international treaty obligations serves as an obstacle to developing the proposed regulations. Specifically, the DEA needed to ensure compliance with two treaty provisions which require a state agency to maintain exclusive control over any cannabis cultivated for research. Accordingly, in addition to amending the criteria for applicants, the proposed rule change states that the DEA will now take possession of all cannabis cultivated for research purposes, and will have the exclusive rights of importing, exporting, wholesale trading, and maintaining stocks of federal marijuana. The proposed rule would not impact cannabis grown for medical or recreational purposes. Click
here
for more info, and click
here
to read the proposed rule and submit comments.
Labor Peace Agreements & Cannabis Licensing
The National Right to Work Foundation (NRWF) sent a letter to the National Labor Relations Board (NLRB) on March 19th asking the General Counsel to sue several states over what it perceives as discriminatory labor practices in the cannabis industry. Specifically, NRWF argues that state laws which require cannabis employers to sign “labor peace agreements” in order to maintain licensure, or grant preferential treatment in licensure to those businesses who have signed such agreements, violate those employee’s right not to join a union. Click
here
for more info.
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Consumers Stock Up on Cannabis Following Stay-at-Home Orders
Summary by Cole White
On March 19th, the Seattle-based cannabis data intelligence firm Headset released its data on the surge of cannabis purchases in California and Washington State since the outbreak of COVID-19. Specifically, the firm found that sales of adult use cannabis went up an average of 24% compared to the prior week in Washington. The total purchase price of each transaction also went up about 22% in Washington over the past week, and about 28% over the past month. In California, recreational sales jumped 56% after San Francisco issued its stay-at-home order on March 16th. Headset maintains data on recreational sales in Nevada and Colorado as well, and says that those states also saw corresponding increases in demand.
Anxiety over COVID-19, as well as increased downtime at home have been pointed to as contributing factors to the surge in demand for cannabis. CBD products, however, were a major driver of increased sales. Edible THC products also drove increased demand, pointing to the fact that consumers are looking for other, less contagious ways of sharing their marijuana. Click
here
for more info.
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What Can Cannabis Companies Do to Slow the Spread of COVID-19?
Summary by Cole White
On March 15th, the Cannabis Industry Journal published an article highlighting some actions that cannabis businesses can take to slow the spread of COVID-19 in their communities. These recommendations are largely based on the International Chamber of Commerce's (ICC) Coronavirus Guidelines for Business, which have been handed down to more than 45 million organizations around the world. However, some guidelines like remote working, instituting pick-up or delivery services, and keeping detailed records of everyone the business comes in contact with are specifically applicable to cannabis. The article emphasizes that cannabis businesses should develop “continuity plans” based on ICC guidelines, and that specific actions for each business should depend on local circumstances. Click
here
to read the article, and click below to read the ICC Guidelines.
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Law Enforcement Struggles to Stop Cannabis in the Mail
Summary by Ricardo Balderrama
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Widespread legalization of cannabis creates numerous problems for neighboring states who do not regulate cannabis. One of the largest problems is preventing diversion of cannabis over state lines via the postal service. The U.S Postal Service has recently received several packages containing a variety of THC products, most notably in the form of vape cartridges. This discrete way of obtaining the active component in cannabis is a growing problem for law enforcement tracking the distribution of these products in multiple states, including Kentucky.
Chris Coners, the Director of the Northern Kentucky Drug Strike Force, says that while just a few years ago his team confiscated no THC vape products through the mail, now they see thousands of them each year. Some of the seizures over just the past year included more than 20 kilos of vape cartridges in one shipment. While this problem is consistent across marijuana-legal states, inventory data from those states is scattered. Colorado and Oregon are the only states who post their data online. Coners says that his team is committed to finding the sources of these products and enforcing Kentucky law. Click
here
for more info.
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SBA Says Cannabis Businesses Will Not Receive Disaster Assistance
Summary by Cole White
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With the passage of the $2 Trillion stimulus package on March 27th, the Small Business Administration (SBA) will likely issue around $370 billion dollars to aid small businesses through low-interest loans. While the exact figure is not yet clear, the
SBA has made it clear
that cannabis businesses, cannabis growers and dispensaries, will not have access to these low-interest loans.
In a letter sent to Congress on March 20th, cannabis industry leaders urged the house and senate to lift restrictions so that cannabis businesses could be granted access to relief from the SBA. The organizations highlighted the fact that these businesses must still comply with other federal COVID-19 mandates, including paid sick leave. The cannabis nonprofit NORML said in a statement on March 20th that it was also working with congressional representatives to ensure that cannabis workers will be granted access to unemployment benefits. Current estimates suggest that legal cannabis in the U.S. employs around 240,000 individuals. Click
here
for more info.
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Last newsletter we unveiled the Cannabis Litigation Blog. Check out our latest post covering the hidden ownership of a large cannabis cultivation facility.
We are excited to announce a new collaboration with Professor Rob Mikos of Vanderbilt School of Law.
Professor Mikos is one of the nation’s leading authorities on marijuana law and policy. Over the last decade, he has written, lectured, and testified on the struggles among federal, state, and local officials to control marijuana policy, among other topics. He is the author of a groundbreaking textbook on Marijuana Law, Policy, and Authority, which can be found
here
.
Professor Mikos will guest post on the Litigation Blog on a variety of cutting-edge cannabis topics throughout the month of April. Stay tuned!
Interested in becoming a contributing author?
Contact Austin Bernstein at abernstein@agalliance.org
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