For Cannabis Distribution Companies, It Helps to Have a Nimble Business Model in Times of Crisis
As COVID-19 continues permeating all aspects of daily life, a growing number of municipalities in the U.S. are opting to impose quarantine mandates and shut down all non-essential businesses to slow the virus spreading.
Some entities, like police departments and pharmacies, are obvious in their need to remain open. But the shutdowns have prompted perhaps an unexpected question amid the coronavirus chaos: Are medical marijuana operations considered “essential” in this new public arena?
For many areas across the U.S., the answer is a resounding “yes.”
Over in San Francisco, though, that wasn’t always the case. All seven counties in the Bay Area of California implemented a shelter-in-place order March 16. The order, which is in place until at least April 7, included a list of essential services that could remain open but left room for interpretation regarding other businesses, including cannabis.
At first, the city of San Francisco told cannabis companies they’d need to temporarily shut down their businesses by March 17, the Mercury News reports.
But by the end of the day, advocates had convinced the city health department to change its mind.
“Cannabis is an essential medicine for many San Francisco residents,” the agency said in a statement on Twitter March 17. “Dispensaries can continue to operate as essential businesses during this time, while practicing social distancing and other public health recommendations.”
Since then, several other municipalities and even entire states have come forward with similar declarations.
A Big Step for Cannabis
In nearby Oakland, the decision to keep dispensaries open came as a relief to Magnolia Wellness CEO Debby Goldsberry. For her and other cannabis advocates and professionals, the implications from the decision are vast.
“Our fear was we’d have people turning to the illicit market, where they can have contact with the virus, as opposed to a brick and mortar location that can put infection control policies in place using all the knowledge we have from the CDC [Centers for Disease Control and Prevention],” Goldsberry says.
For dispensaries, there was little doubt that the products they provide are essential.
“There are patients all over the country that rely on cannabis for their day-to-day well-being, and you can’t close a dispensary that operates under a medical program without closing CVS, Walgreens and Rite Aid too,” says Jason Erkes, the chief communications officer for Cresco Labs, which has more than 30 retail licenses in seven states.
But for cannabis to be declared essential by local governments is significant, especially for an industry that is, for the most part (aside from hemp-derived cannabidiol products), still deemed federally illegal, says Morgan Fox, the media relations director for the National Cannabis Industry Association.
The declaration will, of course, also be a major win for cannabis at a time when establishments in other industries, like food service and other areas of retail, are halting operations for the foreseeable future. While nearly every industry will be touched by the spread of COVID-19, keeping establishments open will help soften the blow in the months to come.
“I think it will help bolster the industry and make recovery a little bit easier,” Fox says. “[Cannabis operators] have much higher financial burdens than any other industry, so if they have to cease operations, they may have a harder time climbing out of this hole than others.”
Keeping dispensaries open may also quell another concern brought on by COVID-19: dwindling hospital capacity as more become infected and need medical care. It’s a problem that’s already overwhelming hospitals in Italy, where the death toll from the outbreak has surpassed China, according to NPR. The Italian College of Anesthesia, Analgesia, Resuscitation and Intensive Care has called it a “catastrophe.”
“As it relates to COVID-19, maintaining access to cannabis can help reduce the use of our healthcare system’s resources, like telemedicine, out-patient facilities and pharmacies, with their capacity top of mind,” says David Torrisi, the president of the Massachusetts-based Commonwealth Dispensary Association.
“It’s important for adult-use [operations] to stay open as well, because some states dismantled their medical programs when they expanded into adult-use.” —Morgan Fox, media relations director, National Cannabis Industry Association
Conditions In Place
So far, many of the mandates declaring dispensaries essential have come with conditions. In San Jose, Calif., for example, dispensaries may remain open so long as they take measures to ensure appropriate social distancing, which has been recommended by the CDC to be at least 6 feet.
And in Santa Clara County, dispensaries are only allowed to sell medicinal marijuana products, not adult-use, reports the Mercury News.
Cannabis advocates, however, say adult-use marijuana should have an “essential” declaration as well, as even so-called recreational users can depend on it for therapeutic benefits.
“It’s important for adult-use [operations] to stay open as well, because some states dismantled their medical programs when they expanded into adult-use. Many people use cannabis for therapeutic reasons that don’t qualify in medical programs,” Fox says.
It’s also important for states to continue communicating to residents that dispensaries will remain open, if they make that decision, as it can cut back on panic-buying or stockpiling, which can also create unsafe situations, Fox adds.
Some municipalities looking at quarantine mandates have implemented additional safeguards, like curbside delivery and in-store patient limits, to minimize risk of spreading the virus. Others, however, like the state of Pennsylvania, are holding strong on their ban of cannabis delivery.
“NORML [National Organization for the Reform of Marijuana Laws] advocates that these facilities be permitted and encouraged to deliver products directly to patients and the elderly so that they can continue to engage in social distancing, as recommended by most public health departments,” says NORML executive director Erik Altieri. “For those facilities that continue to maintain operations for on-site retail sales, NORML encourages them to engage in recommended best practices in order to keep both their employees and their customers safe. This includes frequent sanitization of shelving and other public spaces, limits on the total number of customers permitted to congregate together at one time, and potentially imposing specific hours of operation for elderly or other higher-risk patients.”
(NORML has published guidelines for safe and best practices regarding cannabis consumption that dispensaries can share with patients.)
In the days leading up to and following states’ quarantine mandates, some companies have reported an uptick of sales. MJ Holdings Inc. of Las Vegas, for example, has reported long lines of late and says “sales have picked up dramatically.”
Matthew Morgan, the CEO of Terra Tech, which owns Blum dispensaries in Nevada and California, says Blum retail storefronts “are doing exceptionally well with a surge in business during a time of uncertainty.”
Others, like Goldsberry, say sales were steady in the days leading up to the mandate and have since slowed down as consumers remain in their homes.
Either way, dispensaries are taking extra precautions in nearly every aspect of operations.
“Massachusetts cannabis operators are heavily regulated and have extensive experience ensuring hygienic practices meet the needs of those they serve. All have adopted CDC guidance to maintain the well-being of staff, patients and customers alike. Given the relative novelty of the industry in this part of the country, they are also particularly adept at managing crowds, and have proactively taken measures to support safe distancing and minimizing interactions,” Torrisi says.
Goldsberry says she’s made nearly 100 changes, big and small, to accommodate the new regulations and fragile public health environment. Those include everything from limiting visitors to three people at a time to shortening hours.
Since cannabis operations are being deemed essential, employees are being required to come into work. But to accommodate employees who are sick or need to care for someone else, Goldsberry says she’s cut back from running two shifts a day to one a day.
“Cannabis really is essential to people, and I believe keeping access to a safe supply is really key to keeping infection from spreading, so we’ll stick it out. If people keep trickling in, we’ll keep fewer staff, and when the crisis is over, we’ll bring the full staff in and get back to business,” Goldsberry says. “It’s both an honor and also scary to try and serve people, especially in our vulnerable population, during these times. We intend to go above and beyond to keep people safe, our staff particularly.”
Municipalities Follow Suit
Below is a list of states and municipalities that have made decisions about whether cannabis dispensaries will remain open in quarantine situations. This list will be updated as more localities declare their decisions.
- California: Dispensaries are declared essential in Bay Area and Los Angeles counties, along with Monterey in San Benito. Counties began implementing shelter-in-place orders March 16, and the governor signed an executive order March 19 ordering all residents in the state to stay home except for non-essential activities. Getting “necessary health care or critical medical supplies” is considered essential by the state.
- Nevada: Dispensaries are declared essential. On March 17, Gov. Steve Sisolak declared cannabis an essential operation and administered additional guidelines for dispensaries: “Licensed cannabis stores and medical dispensaries should only remain open if employees and consumers strictly adhere to the social distancing protocol. The Nevada Health Response Center is encouraging consumers to use delivery services and not congregate in stores.”
- New York: Dispensaries are declared essential. As of March 20, the governor announced he would sign an executive order mandating all employees stay home except those who work at essential businesses.
- Pennsylvania: Dispensaries are declared essential. All non-essential businesses across the state have been “strongly encouraged” to close as of March 17.
- Washington: Dispensaries are declared essential. All non-essential businesses were ordered to close as of March 15.
Editor’s note: This story was last updated March 20 to reflect changed policies in New York and California.
Published at Fri, 20 Mar 2020 17:56:00 +0000