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When California became the first state to issue a shelter-in-place because of the COVID-19 pandemic, it set another standard by declaring cannabis an “essential business.” But just as states’ overall responses to the pandemic have varied from California’s early mandate, so have marijuana rules.
California Gov. Gavin Newsom decided that dispensaries should be treated something like pharmacies, but also kept recreational sales open, with cannabis businesses adopting safety measures such as curbside pickup, delivery and distancing within retail stores. Nicole Elliott, Newsom’s senior adviser on cannabis, told MarketWatch that California wanted to continue offering medical marijuana users their prescriptions, and recreational smokers an alternative to the black market.
“Recognizing that patients need access to this medicine, as well as acknowledging the importance that consumers continue to be able to access legal cannabis made safer by our regulated marketplace, the governor deemed the cannabis industry essential,” Elliott said in a statement.
While other states with legal recreational marijuana sales followed suit, Massachusetts went in the other direction: It shut down recreational cannabis operations, with the governor expressing concerns that people from neighboring states would travel there to buy weed and spread the virus, since it is one of the few states with recreational pot in the Northeast. Gov. Charlie Baker has allowed medical marijuana sales to continue with new safety measures at stores, but shut down recreational pot sales, and doesn’t have any plans to reopen those businesses four years after voters expanded legal access to the drug.
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Aside from Massachusetts, the other eight U.S. states that allow recreational cannabis sales had all deemed recreational pot retailers essential as of Monday afternoon, though Maine has yet to open recreational pot stores and Congress has prevented Washington, D.C., from implementing a recreational pot regime that was passed by voters. In another approach to handle the pandemic, Nevada has closed all retail locations and is allowing only delivery for recreational and medical cannabis sales.
Canada offers an example of the changing nature of marijuana sales amid the pandemic. Ontario, Canada’s most populous province, had deemed cannabis retailers essential, but said Friday that it would shut down pot shops and allow only online orders from the government-run stores with postal delivery, following similar decisions by Newfoundland and Prince Edward Island. Ontario’s Ministry of the Attorney General was reportedly seeking to allow curbside pick-up in the wake of that decision, however.
Even though in-person retail was shut down in Ontario, Canada’s licensed producers are continuing operations, as many of the largest companies are based there, including Canopy Growth Corp. CGC, -1.75% WEED, -1.92% — which had previously said it was closing all stores it operated — Aphria Inc. APHA, +0.31% APHA, -0.89% and Cronos Group Inc. CRON, -4.61% CRON, -4.71%.
In states where only medical marijuana is legal, the vast majority have said that patient access is essential; those that have not made specific declarations had not moved as of late Monday to shut down operations. Some, such as West Virginia, do not yet have fully operational medical cannabis programs.
“In the 33 states that have legalized medical cannabis, patients need to purchase medicine for cancer, epilepsy, [post-traumatic stress disorder], and other conditions,” Randal Meyer, executive director of the Global Alliance for Cannabis Commerce, said over the phone. “There is a good reason for cannabis [retailers] to be treated like pharmacies. The basis is medical.”
How the industry is dealing with coronavirus
Industry insiders interviewed for this story said that as with other goods, like groceries, it would be possible for the coronavirus to survive on cannabis packaging, though there doesn’t appear to be specific information on whether the virus is able to survive on cannabis flower itself, or if so, for how long.
Employees are likely more at risk than consumers, and several employees in the pot industry across the country have already tested positive for COVID-19. Growing operations have been forced to take measures to reduce the number of staff working at sites to protect workers and the community. Canadian producer Organigram Holdings Inc. OGI, +0.54% OGI, -0.43% said Monday that it was temporarily laying off 45% of its staff, or about 400 people, but the situation continues to evolve.
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Guidelines for operating recreational cannabis companies amid the pandemic differ from state to state, but generally focus on social distancing, limiting contact between consumers and retailers, and increasing sanitation. Colorado’s state guidelines, for example, instruct cannabis operators to limit the number of people inside licensed sites, ensuring people are at least 6 feet apart, encouraging pre-orders and curbside pickup, arranging payment before pickup, limiting the formation of lines and if a line does form, capping the number of people in it.
Treez Chief Executive John Yang said that his team — which makes enterprise software tailored to cannabis companies — is seeing that the substantial changes to the basics of selling a gram of weed to consumers has weighed on dispensaries.
“You can’t be as efficient as before, and retailers are forcing a delivery or pickup model,” Yang said in a phone interview.
Requiring customers to pick up orders means companies must have runners, fulfillers and people taking orders over the phone, he said, which isn’t as efficient as normal operations. Cannabis companies in the U.S. also have limited access to financial services because marijuana is prohibited by federal law, which forces many of them to only accept cash that could be contaminated with the coronavirus.
In a videoconference Friday, Jerred Kilohm, who operates the Los Angeles dispensary The Higher Path, described how his staff uses a basket to collect cash from customers to eliminate the need to come into contact with the customers. The retailer is also implementing additional hand-washing, giving employees rubber gloves and other sanitation measures.
‘This is a very fluid situation’
In Florida, which has legalized medical marijuana, dispensaries are zoned as pharmacies, marijuana is not taxed and is considered essential. With the majority of its operations located in that state, Trulieve Cannabis Corp. TRUL, -0.58% TCNNF, -0.99% Chief Executive Kim Rivers said the company’s existing emergency response team, which normally handles hurricanes, has implemented a number of safety measures, such as deep-cleaning and sanitation at the company’s facilities that already follow pharmaceutical-level standards.
“In general, our employees are happy that work is available and we’re increasing production to meet demand,” Rivers said in a phone interview. “This is a very fluid situation and we are having daily conversations around daily impacts. We’re all coming to the realization that this will be the new normal over a period of time.”
Though Florida has not mandated marijuana delivery for all purchases, Trulieve customers have opted to buy product that way, sending delivery demand up 485%, which prompted Trulieve to nearly double its fleet of delivery cars.
Amid the nearly nationwide isolation due to pandemic-related lockdowns, Trulieve’s patient base appears to be dealing with it by speaking with the company’s staff over the phone more often and for longer. The company has received triple the number of calls it usually gets over a week, and Rivers said patients are more chatty: People are talking with Trulieve’s staff on average of 14 minutes, four minutes longer than they normally do.
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Cannabis distributor Nabis, which operates in California, has made significant changes to its operations, staggering the company’s work hours — running deliveries Monday through Wednesday and having its pickers and packers in the warehouses Thursday and Friday — to minimize the number of people together at any one time. Like consumers, Nabis saw retailers stockpiling products initially, with the average order size doubling sharply when the news about the pandemic became widespread, CEO Vincent Ning said over the phone.
Ning said that because of the state regulations and practical matters, some contact with other people is impossible to avoid. It’s not possible to drop a $4,000 order of pot off on the side of the street, and each order is required to have a signed manifest.
Ning said distributors have been having trouble with law enforcement not knowing about or believing that cannabis is an essential service in California. After one of his trucks was stopped by law enforcement and detained for about 20 minutes while on a run, and the headaches related to sorting it out after the fact — which ate into efficiencies — his drivers now carry a letter from the governor that makes it clear that pot is considered essential.
“It just costs more for our business, adds a lot of additional headaches and costs,” Ning said. “But we’re looking at the essential status as a privilege, not a right.”
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