Marijuana firms aim to leverage ‘essential business’ status amid COVID-19 economic slide

(Scroll down to participate in a poll and share your thoughts about how the COVID-19 crisis might impact future cannabis industry regulatory relief.)

Cannabis businesses declared essential during the coronavirus outbreak are hoping to leverage newly allowed flexibility such as curbside pickup and home delivery into permanent ways of doing business.

They also believe this is an ideal opportunity to seek additional regulatory relief and other reforms to help fend off challenges related to the economic downturn resulting from COVID-19.

The emboldened marijuana industry also hopes to accelerate legalization efforts, especially given that states are becoming financially strapped amid economic shutdowns related to coronavirus.

“Cannabis is going to be an important part of the economic recovery. … I think, first and foremost, is tax revenue,” Adam Goers, vice president of corporate affairs for New York-based multistate operator Columbia Care, said during a recent media briefing sponsored by the Cannabis Information Project.

The Cannabis Information Project is made up of 12 of the largest marijuana operators in North America, with a mission that includes communicating the benefits of the industry to the public, regulators and other cannabis stakeholders.

According to industry officials, more flexible regulatory regimes and marijuana laws offer a potential win-win for companies and governments including:

  • Additional sales for cannabis businesses.
  • Significant tax revenue and job growth for states and municipalities at a time they need it most.

Such flexibility also would help state-legal marijuana businesses stem losses to illicit markets, another benefit for both the industry and communities.

The industry wish list depends on the location, but here are a few examples:

  • Permit curbside pickup and home delivery as permanent options going forward in states that are now allowing it on a temporary basis.
  • Add smokable flower and physician discretion to New York’s medical marijuana industry, which currently is one of the most restrictive MMJ programs in the country.
  • Ease investment restrictions. In Oregon, for example, state regulators must approve any loan to a marijuana business that exceeds $100,000.

Industry officials said the cannabis industry has shown during the coronavirus pandemic it can operate responsibly in an environment with more flexibility such as curbside pickup and home delivery.

Chris Melillo, senior vice president of retail operations for Massachusetts-based Curaleaf said: “I also think it’s a great opportunity to continue to lobby for change for patients and customers.”

But policy changes at the state level are going to reach only so far, industry officials said.

“Without any changes on the federal level and even on a state level, it’s undoubtedly true that we’re going to see bankruptcies, we’re going to see liquidations, we’re going to see job losses along the way,” Columbia Care’s Goers said.

Short of nationwide legalization, industry officials see several federal reforms as crucial:

  • Banking access.
  • Tax equity. Marijuana companies, because of their federally illegal status, currently are prevented under Section 280E of the IRS code from taking business tax deductions.
  • Insurance reimbursement for medical marijuana patients.

Home delivery could remain long-lasting

The coronavirus crisis not only compelled some states to deem marijuana companies essential but also ushered in a new way of doing business with online ordering, curbside pickup and home delivery. 

Kelly Fair, U.S. general counsel for Canadian-based Canopy Growth, noted that Colorado issued its first marijuana delivery license during the COVID-19 pandemic, a measure long advocated for by the cannabis industry and finally passed by state lawmakers last year.

A number of states have permitted and encouraged delivery during the coronavirus crisis, and more than a dozen states put in place regulations allowing curbside pickup.

Fair said she believes these changes will extend beyond the pandemic.

Rather, she noted, they also are “signaling some broader policy changes in how jurisdictions allow dispensaries to operate.”

Coming Soon
Will the “essential business” status most states gave to MMJ firms amid the coronavirus pandemic make it easier for the industry to win additional regulatory relief during the economic fallout caused by COVID-19?
Will the “essential business” status most states gave to MMJ firms amid the coronavirus pandemic make it easier for the industry to win additional regulatory relief during the economic fallout caused by COVID-19?
Will the “essential business” status most states gave to MMJ firms amid the coronavirus pandemic make it easier for the industry to win additional regulatory relief during the economic fallout caused by COVID-19?

New York’s dilemma could spur changes

Ngiste Abebe, director of public policy at Columbia Care, gave New York high marks for declaring medical marijuana businesses essential and allowing delivery and curbside pickup.

But the outbreak also revealed flaws in the state’s MMJ program, she said.

“(The New York market is) one of the least affordable and accessible, and these are challenges that existed before COVID-19 struck and only exacerbated by a global pandemic,” Abebe said.

Because of those issues, she added, illicit sales are thriving during the pandemic.

One quick fix suggested by Adebe would allow physicians to determine if patients have a condition that would benefit from medical cannabis.

Currently, patients in New York may obtain medical cannabis only if they meet certain qualifying conditions. Anxiety, for example, is not one of them.

Abebe also said the industry plans to continue to advocate for allowing smokable flower in New York, which would be the most-affordable, least-processed product. That would translate not only into a sales boom for legal operators but a likely dampening of illicit sales.

Recreational marijuana legalization stalled again in New York this year, this time because of coronavirus.

But states increasingly will need to consider legalization as a way to help their financial situations, Goers said. New York faced a multibillion-dollar budget gap before coronavirus, and the state’s situation is even more dire now.

“Without a doubt, we’ll be seeing places like New York, New Jersey and many other states looking to pass adult-use cannabis as a way to help fix their budget woes,” Goers said.

The Wisconsin-based National Association of Cannabis Businesses said this week it is urging governors in seven northeastern states to push for adult-use cannabis legalization as part of their strategies to reopen and reenergize state economies.

An initiative to legalize recreational marijuana in New Jersey is set to go before the state’s voters on the November ballot.

Even states that are seen as traditionally more conservative, such as Texas, might feel the pressure to legalize marijuana, according to media reports.

Additional regulatory relief is needed

Industry officials also say this is a good time to work with state regulators and lawmakers on modifying overly strict regulations or rules that are outdated.

In Oregon, for example, industry officials plan to lobby to ease investment and marijuana business-transfer rules, according to Danica Hibpshman, an attorney at Tonkon Torp in Portland.

Currently, she said, state regulators must approve any loan to a marijuana business that exceeds $100,000 and OK the sale of licensed MJ operators. It can take months for regulatory approvals because of a backlog, she said.

Cannabis companies are struggling, Hibpshman noted, because they don’t have access to banking services and federal stimulus money and they need more financial flexibility going forward. For example, the industry would like to see the loan-approval threshold increased to $1 million.

Hibpshman, former director of licensing at the Oregon Liquor Control Commission, told Marijuana Business Daily she believes regulators will be reasonable in considering changes.

“State of Oregon regulators have been receptive to a lot of these things,” she said.

It’s uncertain, though, how quickly regulators and lawmakers across the country will implement changes that provide more flexibility to marijuana operators and, in turn, help governments begin to replenish their coffers.

Said Hibpshman of a coronavirus-related challenge: “It’s difficult because everyone is working remotely.”

Jeff Smith can be reached at [email protected]

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

Join the “Survive to Thrive” executive strategy session at MJBizConNEXT Direct for additional guidance on adjusting staffing, structure and more in the wake of COVID-19.

One comment on “Marijuana firms aim to leverage ‘essential business’ status amid COVID-19 economic slide
  1. Andy Finan on

    California needs mail delivery also. Canada allows It and makes sense. it easy to get your cannabis and be safe. We need to use our credit cards not cash. Change the banking laws to access to credit card transactions and capital No brainer!

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