UPDATE: Just hours after this article was first published, Governor Inslee announced his “Stay Home, Stay Healthy” order, utilizing nearly identical language (and organization) as the California order. (See Section II(A), below).
Again, the “essential workforce” listed is organized by category. Under the “Healthcare/Public Health” category, essential workers include not only traditional doctors and hospital personnel, but also “[w]orkers in other medical facilities.” Like in California, nearly twenty (20) “other medical facilities” are listed in the Washington state-issued document, in alphabetical order. That list includes Ambulatory Health, Community Mental Health, Hospices, Psychiatric, Rural Health Clinics, and more; and tucked into that list, at the very end – and out of alphabetical order – are: “consumer health products” and “cannabis retailers.” Under the “Food and Agriculture” sector, the Proclamation also lists, “[w]orkers supporting cannabis retail and dietary supplement retail.”
Like in California, no distinction is made in the State’s designation between medical and adult-use (or “discretionary”); nor is a distinction made between hemp and marijuana. (See Section II(A), below.) Therefore, it appears that Washington, like other states, have deemed its citizens’ ability to purchase legal cannabis essential to modern life.
The coronavirus crisis has caused and will continue to cause massive cultural and economic disruptions. While uncertainty abounds, consumer behavior data before and after the issuance of the shelter-in-place orders demonstrate that cannabis is an “essential” aspect of modern American life.
As Americans are being asked – and, in some cases, required – to stay indoors, avoid social gatherings, and venture into public spaces only for essential products and services, consumer needs, as well as the way companies provide relevant products and services, are changing rapidly. Behind the scenes, government leaders at the federal, state, and local levels are working to respond appropriately to the coronavirus threat. At the time of publication, California, New York, Illinois, Ohio, and Louisiana have already ordered the closure of all “non-essential” businesses and for such “non-essential” workers to stay home.
Washington state’s Governor Inslee held a press conference three days ago stating he would avoid imposing a shelter-in-place order, however, over the weekend, the pressure steadily mounted for the government to issue a statewide “stay at home” order. King County Councilmember Reagan Dunn wrote a letter addressed to Mr. Dow Constantine, King County Executive, calling for the order, citing the “public health benefits” and the “probability of grave illness and widespread death.” Teamsters, Local 174, which comprises more than 8,200 members working primarily in construction, transportation, and warehousing industries, sent a letter of their own, urging the Governor: “If you care at all about working people and their health and safety, you need to institute a lockdown/shelter-in-place order immediately.” Certain concerned citizens have also taken matters into their own hands, garnering more than 5,400 signatures (as of publication) in support of a mandatory shelter-in-place order.
I. Consumers Stockpile Marijuana Ahead of Coronavirus Shutdowns
As a shelter-in-place order could be on the horizon for Washington state, state-licensed and ancillary marijuana businesses are concerned about the impact of these regulations on their ability to produce, process, and ultimately sell product to consumers.
Consumers are worried, too, and the data seems to be indicating that consumers are “stocking up.” Last Monday, before the shelter-in-place orders went into effect, consumers in marijuana-friendly states increased dramatically: in California, sales of recreational cannabis were 159% higher than sales the previous year. Colorado’s sales were up 46%, and Washington state’s sales increased a full 100% from the previous year. (Interestingly, data indicates that males make up roughly two-thirds of cannabis spending on an average day, but on the weekend of March 13 – 15, the increase in cannabis spending of females was nearly double the sales growth of males.) Our office, along with other industry insiders, was monitoring the situation closely, generally observing cannabis retailers’ decreased inventory carry levels and other relevant data points.
In the latter two states – Colorado and Washington – no shelter-in-place order was issued prior to, or over, the weekend. In those states, recreational marijuana sales have remained higher than normal, with retail stores experiencing approximately 20% higher sales volumes throughout this past weekend as compared to an average weekend in the preceding month. In California, however, where a shelter-in-place order was issued on Thursday (March 19), and in Nevada, where a mandatory order shut down nonessential businesses on Friday (March 20), marijuana retailers necessarily experienced dramatic declines in sales.
Data from these last several weeks elucidate another interesting trend, shedding light on which generations prioritize cannabis ahead of a period of potential scarcity. During the weekend of March 13 – 15, prior to the enactment of shelter-in-place orders and non-essential business closures, while marijuana retailers experienced an overall surge in business, not all generations purchased more marijuana. In fact, Baby Boomers actually purchased less marijuana during that weekend (though those who did frequent a dispensary purchased 12% more product than usual), while Generation Z’s consumer activity remained stable. However, both Millennials and Generation X increased their market share significantly, suggesting that these age groups prioritize cannabis and are either stockpiling cannabis out of fear that it will not be available to consumers in the months ahead and/or are increasing their use of marijuana during these social-distancing periods.
II. Is Cannabis Essential?
The availability of cannabis during such shutdowns depends on the content and construction of both existing and newly passed laws and regulations. Existing federal guidelines give authority to state and local governments to determine what is considered “essential” during such emergencies. The crux of the issue, thus, is whether marijuana products (and related services) are or will be deemed essential or non-essential in each separate location.
Today, many citizens and government leaders consider the use of marijuana as a valid component of health care, and health care is overwhelmingly considered an essential – if not the primary – concern during such a state of emergency. But what if consumers live in an area where their local government leaders or community members do not believe marijuana is a valid component of health care or otherwise essential?
III. Essentialness of Marijuana, by State:
California’s statewide shelter in place order issued by Governor Newsom on Thursday directs all residents to stay at home, except as necessary to maintain “continuity of operation of the federal critical infrastructure sectors, critical government services, schools, childcare, and construction, including housing construction.” Following the issuance of that order, the State Public Health Officer has designated an amendable list of “Essential Critical Infrastructure Workers” to help provide guidance to state, local, tribal, and industry partners as they implement their own policies “to protect communities, while ensuring continuity of functions critical to public health and safety, as well as economic and national security.”
The “essential workforce” listed is organized by category. Under the “Healthcare/Public Health” category, essential workers include not only traditional doctors and hospital personnel, but also “[w]orkers in other medical facilities.” Nearly twenty (20) “other medical facilities” are listed in the state-issued documents, in alphabetical order. That list includes Ambulatory Health, Community Mental Health, Hospices, Psychiatric, Rural Health Clinics, and more; and tucked into that list, at the very end, and out of alphabetical order is: “cannabis retailers” (suggesting cannabis retailers may have been highly debated and late-added).
However, local jurisdictions differ with respect to the interpretation and applicability of that guidance. Specifically, counties must decide whether all legal commercial cannabis operations (recreational and medicinal) fall under the definition of essential workforce, or whether only licensed medical-marijuana dispensaries are permitted to stay open under the order. To complicate issues further, dispensaries serve both medical and recreational customers, so how to best enforce any new policy is equally unclear. For example, a spokesperson for Contra Costa County’s Health Services would only comment that “licensed medicinal-marijuana dispensaries are allowed to stay open under the order.” In Monterey County, however, health officials consider agricultural and healthcare operations to be essential, and have announced that, in their view, “All legal commercial cannabis operations fall under one of these definitions. As such, all legal commercial cannabis operations may remain open. However, all social distancing requirements must be observed.”
Thus, at the present time, it is unclear whether and which local jurisdictions will consider marijuana dispensaries “essential businesses” under the shelter-in-place mandates. In the meantime, advocates are working to ensure that these protections extend to all cannabis retailers (and other licensed, as well as ancillary businesses) throughout the state.
Nevada is taking a different approach, uniformly protecting the consumer’s right to purchase marijuana whether or not the use is officially medically authorized. (Indeed, there is a strong movement in the cannabis industry to conflate and replace the term “recreational use” with “discretionary use.”) However, the regulations create significant hurdles for storefront-based businesses which must now quickly (and successfully) pivot into a delivery-only model.
Last Friday, in Nevada, Governor Sisolak signed into law “NAC 414.XXX Businesses During Times of Declared Emergency (NRS 414.060, 414.070)”, defining an “essential licensed business” to include things like essential healthcare operations, infrastructure operations (like sewer, gas, electric), grocery stores, retailers that sell food, household, cleaning, and personal care items, restaurants and food establishments that offer meals on a takeout, curbside pickup, delivery or drive-through basis only, pet supply stores and animal shelters, banks, and financial intuitions. “Essential businesses” as defined also expressly includes: “(h) Licensed Cannabis entities, including dispensaries, producers, and cultivators[.]” However, the accompanying Declaration of Emergency Directive imposed additional restrictions, limiting “[r]etail cannabis dispensaries” to “operate by delivery only pursuant to the guidance that shall be issued by the Department of Taxation.” The Department of Taxation subsequently required all retailers to close by midnight that same day.
In Nevada, thirty-eight dispensaries are already licensed to provide marijuana delivery services, and the Department of Taxation announced a new, temporary procedure to approve additional delivery vehicles, issuing licenses valid for 60days so that all dispensaries can deliver their own products to consumers for the foreseeable future. Cultivators, processors, distributors, and testing facilities are permitted to continue operations as long as they follow strict social distancing and cleaning procedures.
Governor Pritzker’s stay-at-home order applicable to Illinois residents declares marijuana an “Essential Business” under the category “Food, beverage, and cannabis production and agriculture.” Sec 12(b). The order not only permits but “encourages” these businesses to remain open.
Under the Order and the subsequent guidance provided by the Illinois Department of Financial and Professional Regulation, retailers are permitted to sell to consumers in stores so long as they observe all social distancing and sanitation regulations. Further, retailers who provide medical marijuana are also temporarily permitted to sell medical cannabis outside of the “limited access area” – that is, outside of the retail store. In practice, this allows the medical cannabis retailer to provide sidewalk and curbside services to medical marijuana patients. Patients need only walk or drive up to the walkway or curb of the street adjacent to the dispensary, and retailers can now walk the product, as well as handle cash, outside of the store.
It is no secret that Washington state does not permit the delivery of marijuana to residences. Washington laws are strict with respect to retailer compliance, and relevant violations abound for conduct that is prohibited in Washington State but is commonplace – or even required! – in other states’ cannabis industries. Indeed, while the issue has been visited and revisited numerous times by state legislators and local regulators, the cannabis industry has never been permitted to provide marijuana in this manner in the state of Washington.
Things may be about to change. Last Tuesday, the Washington State Liquor and Cannabis Board confirmed that cannabis retailers are not required to close under the existing orders, and also – in a stunning change of policy – announced it would suddenly permit “curbside service” for qualified medical patients. In short, cannabis retailers may temporarily sell to qualifying patients (or their designated providers) outside of the physical store so long as the purchaser is located within the licensed property line. While “drive-through windows” are expressly prohibited, the relaxation of these regulations could signal Washington’s willingness – like Nevada and Illinois – to permit the provision of even non-medicinal marijuana in a responsible, regulated fashion outside of the traditional retail storefront.
See, UPDATE: Just hours after we posted this article, Governor Inslee announced his “Stay Home, Stay Healthy” order, which utilizes nearly identical language (and organization) from the California order (see above).
Again, the “essential workforce” listed is organized by category. Under the “Healthcare/Public Health” category, essential workers include not only traditional doctors and hospital personnel, but also “[w]orkers in other medical facilities.” Like in California, nearly twenty (20) “other medical facilities” are listed in the Washington state-issued document, in alphabetical order. That list includes Ambulatory Health, Community Mental Health, Hospices, Psychiatric, Rural Health Clinics, and more; and tucked into that list, at the very end, and out of alphabetical order is: “consumer health products” and “cannabis retailers.” Under the “Food and Agriculture” sector, the Proclamation lists, “[w]orkers supporting cannabis retail and dietary supplement retail.”
Like in California, no distinction is made in the State’s designation between medical and adult-use (or “discretionary”); nor is a distinction made between hemp and marijuana. Therefore, it appears that Washington, like other states, have deemed its citizens’ ability to purchase legal cannabis essential to modern life.
IV. Looking Forward
In short, a significant number of states who have been presented with the legal issue have deemed cannabis, licensed businesses, and marijuana service providers “essential” during this state of emergency. Some jurisdictions are going even further, issuing rulings temporarily expanding their services. However, such is not the case in every legal marijuana market.
There is no dispute that there are obvious risks posed to individuals and entire communities containing members who are unable to obtain their medicine. However, the failure of government leaders to recognize cannabis as “essential” will result in the functional re-criminalization of marijuana.
Those concerns create worry in not only government leaders but also industry insiders, such as Steve DeAngelo, co-founder and chairman emeritus of Harborside dispensaries in California. As Mr. DeAngelo told Forbes Magazine last week, “Unlike most other products in our society, […] there is an extremely robust underground market for cannabis. If the dispensaries […] were closed, that slack would immediately be taken up by unlicensed delivery services.”
In order to avoid the re-criminalization of marijuana, and discourage the resurgence of black market (and thus unregulated, untested, and potentially dangerous) products – particularly in regulated states – Government leaders would be wise to heed the advice of industry professionals and the market demand of consumers, so as to properly consider cannabis an “essential” aspect of modern American life.