The effects of the COVID-19 (corona virus) pandemic are coming into focus and the impacts for the cannabis industry are striking and potentially severe. In response to this public health crisis, here are some announcements and observations from the Firm.
1. The Firm is no longer meeting in person, either inside or outside the office. Attorneys and staff are working remotely from home to limit social interaction and are available via telephone, video conference, and e-mail.
2. Initial feedback from stores in Colorado is that sales were brisk this weekend. However, this could merely reflect a “stocking up” phenomenon, and sales could begin to decline in the coming weeks as people avoid unnecessary public interaction or if stores are ordered closed.
3. Governor Polis announced Monday that the Colorado Department of Revenue, which includes the MED, will not accept in person business from March 18-April 18. All business with the MED will be done electronically for the next month. The MED’s licensing web page will have periodic updates.
4. If Colorado had a functioning marijuana delivery system, we would expect delivery sales to sharply increase. However, because most local governments failed to adopt rules regarding delivery, it is not a solution at this time. Industry participants should urge local governments to expedite delivery rules to mitigate this crisis. For medical patients, delivery could be an essential service since they would jeopardize their health in public. This is one example of how we can use this challenge as an opportunity to make progress.
5. As you may know, Denver has ordered all restaurants and bars to close except for takeout and delivery for eight weeks. Clients and others have asked us if there is any store or cultivation shutdown in the works. Sean McAllister spoke Monday with Ean Seeb, the Governor’s Special Advisor on Cannabis. The Governor has no current plan to shutter dispensaries or other cannabis operations. However, local governments have considered shutting down businesses generally. The Crested Butte Town Council held an emergency meeting to discuss shutting all businesses, although dispensaries were exempted from that potential shutdown. The Trump Administration has issued new guidelines calling for people to avoid groups of 10 or more. Governor Polis shut down the ski resorts over the weekend. With this much momentum toward social distancing, cannabis businesses need to begin preparing for the possibility of new limitations on their operations. Organic Alternatives in Fort Collins voluntarily shut its doors on Monday. A full shutdown of the industry will almost certainly lead to an increase in illicit sales.
6. The Firm has reached out to the MED to determine if any guidance will be forthcoming. Initial ideas, none of which are finalized, include allowing curbside sales or authorizing emergency delivery rules for medical patients only. In the meantime, businesses should mitigate risks to their employees, including considering staggering shifts or altering operations to limit large gatherings. We recommend that businesses prepare COVID-19 policies and related communications to assure their customers that they are taking measures to prevent the spread of the disease via employees and products.
7. We have also asked the MED and the City and County of Denver if licensees are required to file applications for COVID-19-related emergency measures, such as moving a trim room to a different room to limit large groupings of people. Finally, it is unclear if in person regulatory hearings will be held, but almost certainly those hearings will be rescheduled as courts are now postponing hearings or suspending operations.
8. This has already been a very challenging year for cannabis and hemp companies. We are actively watching how this crisis will affect investment, lending, and other services for the industry. The Firm is prepared to help counsel clients through these unprecedented challenges in the coming weeks.
We will continue to update you as new developments occur. If you have any concerns or questions during this difficult time, please do not hesitate to contact us to discuss your response to COVID-19 and its effect on the industry and the economy. Stay safe and healthy.
The McAllister Garfield team