The coronavirus outbreak has upended the global economy, leaving most commercial industries reeling. Cannabis is no exception.
As some local and state governments rush to declare medical cannabis businesses “essential,” thus allowing them to continue operating as quarantine policies become more entrenched, the overarching question remains: How can the industry ensure access for patients in need?
Brian Vicente, partner and founding member of Vicente Sederberg, based in Colorado, addresses some of the intersections between cannabis business and regulators—places where solutions to emerging problems may be found.
What are some of the more common questions your firm is fielding? What sort of themes are emerging on the legal side of this crisis?
I’ve been trying to reinforce a positive talking point, which is: In times of economic distress, frequently, medicines and vices do well. Now, I’m not one who normally calls cannabis a vice. It’s actually more of a positive thing for society. But if you look historically at economic data, alcohol and things of this nature do well. So, I do think the long-term prognosis for the cannabis industry is positive. But that doesn’t mean we’re not going to deal with some major hiccups in the short to medium term.
I would say the main question that we’ve been fielding by far is, “Are we going to be able to stay open?” We represent probably close to 1,000 stores, grows, manufacturers across the country. And at this point, it’s a patchwork quilt of regulations, of decisions being made. Sometimes that’s at the state level, like we saw in Pennsylvania, where they decided that medical marijuana stores are essential. There are places in California that said, “We’re shutting everything down.” It’s a very dynamic conversation. We’ve been chatting with regulators across the country, trying to really let them know that the priority here for the whole cannabis industry should be taking care of medical marijuana patients. We have some policies and things we drafted up around that. That’s top priority.
The secondary piece is, what are we going to do about these cultivation facilities? If they really shut down cultivation facilities, that cuts off the medical marijuana supply chain and obviously devastates businesses as well. It’s been a series of daily calls as we’re just trying to figure out where regulators are going to go on this and communicate that to clients.
We saw relatively swift action with Michigan and Illinois opening the door to both curbside sales for medical cannabis patients and, in Michigan at least, delivery for those retail businesses that otherwise hadn’t yet been given the green light for delivery. Are those two simple fixes that you might be prescribing?
I would say there’s three that we’ve been pushing hard. There’s many more than three, but we’re certainly pushing for home delivery when possible, pushing for curbside delivery, pushing patients toward making online orders and then having an expedited pickup line. And we’ve been trying to work with our clients, the store owners, to have expedited lines for patients. You’ve seen or maybe heard that we’ve got lines around the block from Colorado to Illinois at these stores. And if I’m a patient, I don’t think I should be standing in the same line. It’s a health issue.
And I will say that I’ve been impressed by the store owners we’ve talked to. Even though the bulk of their sales are recreational, … they’re trying to prioritize [medical cannabis patients]. Now, some municipalities and some states like Michigan and Illinois have been quick to jump on finding a way to get curbside in place. Colorado doesn’t have any real delivery mechanism—limited deliveries for patients which really isn’t off the ground yet. We’ve been trying to work with the governor’s staff and had a very open dialogue about how to expedite the idea of something as simple as delivery. It’s not a law that’s allowed right now. How do we get this done? And they’ve been open to it, but we haven’t seen any changes yet.
In terms of ensuring that businesses stay open and maybe deeming them “essential,” what lessons can we take from, say, Pennsylvania? Are there ways of sparking the conversation with regulators to ensure that they’re thinking about cannabis in an important, significant way?
Really, starting last weekend, a lot of advocates—not only our law firm, but advocacy organizations nationally—have been pushing hard to get this message in front of elected officials and regulators. We know they have a lot on their plate, but they need to hear from us now before they take some drastic action to shut down this multi-billion-dollar business internationally. So, [we’re] really getting that in front of them and trying to walk them through the consequences. They’ve never dealt with this before, and neither have we.
The good thing is that we are at a place where most states that have these programs, medical marijuana or adult-use, have dedicated staff that simply work on cannabis. The other cannabis regulators, as such, this is a high priority for them. We’ve had a great dialogue.
What’s been tougher is when you’re trying to get to the executives. Whether that’s the governor or others, they have a lot of competing interests on their plate. We just need to be persistent and concise in our messaging, and really come together as a movement. We’ve seen in Colorado and some other places, California, sign-on letters, groups that maybe don’t agree on everything. Business owners who compete against each other are coming together. We’re helping the draft sign-on letters, getting those in front of regulators or executive folks, so they have a single message and can take quick action based off that singular point.
We’ve looked at what the feds are discussing, in terms of SBA loans on the table for a lot of businesses, but, of course, that leaves cannabis businesses out in the cold. Are you seeing anything that’s heartening on the state level, whether it’s in Colorado or elsewhere, financially?
At the federal level, we’re looking at SBA loans and other things that would apply to federally legal businesses only. We’re upset about that. And we’re in contact with federal officials, letting them know how we feel. The second piece people need to keep in mind is, by and large, cannabis businesses can’t access bankruptcy in the way that other businesses can. So that is very concerning.
In terms of the positive, I will say this: At the federal level, we’ve had a robust discussion this week about 280E and providing relief—pushing through 280E relief quickly. That would be a big deal. We need to look for ways—and I will say elected officials have gotten behind us thus far. I don’t know if we’re going to necessarily see this pass, but the fact that they’re prioritizing conversations with us about planning through 280E to provide much needed relief to these businesses is a pretty big deal.
As this week moves forward, what are some other things that we haven’t yet talked about that that you’re sort of really watching or you think are important for business owners to keep in mind?
There’s your state and local deadlines, if you will. I do think there’s a pretty good chance that things like patient card renewals—which some places have to have annually, some places it’s every two years—and business renewals, application dates for new businesses, these are becoming pretty fungible. And I think at least local governments are sort of understanding they need to push back deadlines to make this easier for businesses. And I wouldn’t be surprised if we saw states that, if your medical marijuana card needs to be renewed in March or April, they’re just going to issue an automatic six-month extension or something like that. Those are some of the measures we’re pushing for and we haven’t got traction yet.
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