Cannabusiness Advisory

The cannabis industry, like nearly every facet of the economy, has been affected by the COVID-19 crisis, or the Coronavirus. Numerous states across the country have imposed a variety of measures to limit the spread of the Coronavirus, including stay-at-home orders, business closures and bans on gatherings between 5-10 people. While medically necessary, these measures have been financially difficult for many businesses across a variety of industries. However, COVID-19 has had a mixed impact on the cannabis industry.

Over the last few weeks – as the crisis ground many economic sectors to a halt – individual states have implemented a patchwork of policies to combat the spread of the Coronavirus and, ultimately, preserve their respective economies. Within the last month, seventeen states so far have issued stay-at-home orders, cautioned residents from leaving engaging in ordinary activity. Just this week, some Governors, including Governor Baker here in Massachusetts have issued orders minimizing non-essential activities outside of the home along with corresponding directions to close “nonessential” businesses. Of those seventeen states, fourteen have operational and integrated marijuana industries. Finally, nearly twelve of those fourteen have permitted some cannabis companies to remain operational during the Coronavirus crisis. In fact, only two Delaware and Louisiana have not specifically addressed the marijuana industry in their statewide orders.

Here in Massachusetts, Governor Baker declared a State of Emergency on March 10, in response to the spread of the Coronavirus in the Commonwealth. On March 13, the Cannabis Control Commission (“Commission”) provided a bulletin to licensees and certifying health care providers encouraging licensees to review their standard operating procedures to ensure consistency with the Governor’s State of Emergency declaration and continued adherence to the State Sanitary Code. Further, the Commission has urged licensees to consider appropriate mitigating measures to ensure, preserve, and promote public health.

Consequently, adult-use sales in the Commonwealth are paused due to the Coronavirus. Nonetheless, adult-use marijuana retailers throughout several markets in the U.S. saw a dramatic spike in sales in recent days, according to new data, an unambiguous sign that the Coronavirus pandemic catalyzed consumers to stock up on marijuana products. For example, daily sales in California spiked over 159% on Monday (March 16^th) over same-day sales in 2019, and Colorado (+9%) and Washington state (+8%) also reported a significant increase in normal sales. In fact, between March 16^th and March 22^nd, adult-use sales across several key US markets – including California, Colorado, Oregon and Alaska – were up nearly fifty (50)% percent and medical marijuana sales rose forty-one (41%) percent from the same period last year.

Marijuana operators are now in the difficult position of making daily assessments of inventory as they decide whether to increase orders to match the uptick in demand or to scale back production out of concern that they may be forced to close their stores by law.

Notwithstanding the above, as news of the coronavirus continues to evolve, Burns & Levinson’s Cannabis Advisory Practice has seamlessly implemented plans to keep our clients, employees, and community secure. We are closely monitoring recommendations from the World Health Organization, U.S. Centers for Disease Control and Prevention, and local authorities to help prevent the spread of the virus. Moreover, our cross-disciplinary emergency response team is closely monitoring the situation and is implementing strategies to both protect our collective communities and to provide uninterrupted operations, no matter what scenarios may arise. Despite the nation’s current challenges, our offices remain open and our firm has the infrastructure and relevant procedures in place to allow our lawyers and staff to work remotely and to continue servicing our clients at the highest levels.