MjLink Cannabis Business News and Press
As part of its coronavirus response, the Ohio Medical Marijuana Control Program (MMCP) has issued new guidance to help patients maintain access to medical cannabis.
Medical cannabis dispensaries are considered essential and can remain open under the state’s March 22 stay at home order.
The Ohio Board of Pharmacy has announced a temporary expansion of caregiver registration to allow patients to have up to three caregivers. Patients can add a caregiver by submitting an application directly to the Board of Pharmacy.
Due to the closure of Ohio’s BMV locations, the Board of Pharmacy has also adopted new photo identification requirements that allow patients to use an expired method of identification under certain conditions to purchase medical cannabis. Minor patients under the age of 18 may use a birth certificate as an acceptable form of identification.
In addition, the Board of Pharmacy will now allow patients and caregivers to place phone orders with the state’s medical cannabis dispensaries in an effort to protect patients, caregivers and dispensary employees.
LOS ANGELES, March 27, 2020 (GLOBE NEWSWIRE) -- PRESS RELEASE -- Hightimes Holding Corp., the owner of High Times, has announced the signing of an LOI to acquire the California-based cannabis holding company Humboldt Heritage Inc. and its subsidiaries Humboldt Sun Growers Guild and Grateful Eight LLC.
This announcement comes just before the culmination of High Times Regulation A+ campaign, which has recruited over 26,000 shareholders before listing on the public markets.
This acquisition provides High Times with cannabis growing, processing and product manufacturing capabilities direct from the most coveted cannabis community in the world, Humboldt County. Coupled with High Times' recent retail acquisitions, the resulting company will become one of the state’s largest vertically-integrated operators, and provide exclusive access to 18 unique Northern California-based brands including True Humboldt and leading cannagar producer Cuba Libre.
“High Times mission is to connect consumers to cannabis--not only the best access and experience, but by making the best products available to our consumers across the country, and eventually the world,” Adam Levin, Hightimes Holding Corp.’s executive chairman, said. “This addition adds 200+ of the best cannabis-producing farms in the world, and the rest of the capabilities we’ll need to grow into the future as a larger High Times family!”
"This allows our cultivators' and their artisan brands unprecedented exposure to consumers as High Times reaches millions of people all over the world. The farmers in Humboldt Country have been leading parallel missions to High Times over the past 45 years," said Barry Nachshon, CEO of Humboldt Heritage Inc. "Knowing that we will be part of the High Times family, as well as a key manufacturing and supply chain partner as the company enters the retail and delivery markets in California is very exciting for our team."
Like many other states, California has deemed the cannabis industry an “essential” business that can remain operational during the state’s stay at home order aimed at slowing the spread of COVID-19. For Graham Farrar, the founder and CEO of Glass House Farms, a vertically integrated cannabis operator based in Santa Barbara, Calif., this means cannabis businesses must step up to help those in need during this difficult and uncertain time.
“This is a time when we need everybody,” he told Cannabis Business Times. “If you’ve got a shovel, you need to get digging.”
The way Farrar sees it, the industry gets to be the light in an otherwise bleak time, and this is a great opportunity for cannabis businesses to shatter old stereotypes and stigmas while giving back.
“Sometimes you need help—and there have been a lot of people who have helped us along the way—and sometimes you get to be the helper,” he said. “We’re happy to return the favor to society and show how we can help out.”
Glass House Farms recently donated 1,000 lab gowns to Santa Barbara Cottage Hospital, which needed masks, gowns and other personal protective equipment. Glass House Farms operates 500,000 square feet of pesticide-free greenhouse space, so the company has a large inventory of gowns that are used as part of the company’s strict biosecurity protocols.
This week, the Drug Enforcement Administration (DEA) issued a notice of proposed rulemaking to amend its regulations to comply with the requirements of the Controlled Substances Act in an effort to approve pending cannabis cultivation applications and allow entities to move forward with cultivation for research purposes. Elsewhere, states including Pennsylvania, Nevada and Oregon issued new rules to help cannabis businesses navigate the COVID-19 outbreak.
Here, we’ve rounded up the 10 headlines you need to know before this week is over.
Federal: Delivery services have seen increased sales during the COVID-19 outbreak, with TILT Holdings and its fully owned subsidiary Blackbird reporting a 400% increase in delivery sales over the past week. Blackbird technology powers cannabis delivery services in California and Nevada, where the states’ governors have deemed the industry “essential” and open for business, and much of the market has quickly flipped over to delivery and pickup orders. Read moreThe DEA has issued a notice of proposed rulemaking to amend its regulations to comply with the requirements of the Controlled Substances Act in an effort to approve pending cannabis cultivation applications and allow entities to move forward with cultivation for research purposes. The notice signals that the DEA is starting a formal investigation—called a 303 investigation—to vet the 35 entities that have applied for a cultivation license to grow cannabis for research, and public comment on the proposed rules will be accepted through May 22. Read morePennsylvania: The Pennsylvania Department of Health has announced the suspension of certain statutory and regulatory provisions in order to implement a series of changes to allow patients enrolled in the state’s medical cannabis program to continue receiving medication during the COVID-19 pandemic. These changes will be effective as long as Pennsylvania’s Proclamation of Disaster Emergency remains in effect. Read moreNevada: Under an emergency declaration issued by Nevada Gov. Steve Sisolak in the wake of the nationwide coronavirus outbreak, all medical and adult-use cannabis dispensaries must close their storefronts to the public, although deliveries will still be allowed. Nevada’s cannabis cultivation facilities, production facilities, distributors and testing labs will be permitted to continue their operations, but must adhere to strict social distancing guidelines. Read moreOregon: The Oregon Liquor Control Commission (OLCC) has approved a temporary rule that supports social distancing to promote prevention of the spread of the COVID-19 virus by allowing licensed marijuana retailers to conduct limited transactions outside their licensed premises. The action will permit retail licensees to take orders and deliver product from the retail store to a person who is outside of the store and within 150 feet of the retailer’s licensed premises. Read moreMaine: The Office of Marijuana Policy released a memo March 24 indicating that while medical cannabis dispensaries are considered essential businesses under the state’s coronavirus policies, the launch of Maine’s adult-use cannabis market, which was slated for June, will likely be delayed due to the pandemic. The announcement is the latest in a series of delays for the adult-use market, which voters legalized in 2016. Read moreKentucky: In a lawsuit over breach of contract, a Kentucky hemp farming company is arguing that its agreement with an Oregon hemp processing company should be terminated because of the novel coronavirus. Third Wave Farms, headquartered in Mount Vernon, Ky., signed a contract with Canby, Ore.-based Pure Valley Solutions in May 2019 to act as a broker for Pure Valley’s winterized CBD oil, but the contract quickly crumbled on both sides. Read moreUtah: Qualified patients can now access medical cannabis with recommendation letters from their medical cannabis providers after a new law took effect March 25. The change in law is part of House Bill 425, which lawmakers passed in the latest legislative session and which Gov. Gary Herbert signed into law. Read moreCanada: The Alberta Cannabis Council is calling on the Canadian government to provide the cannabis industry access to relief funds. The letter, signed by 74 industry members, calls for the “equal and fair access to significant supports for all cannabis companies working to keep employees employed, including access to wage subsidies as announced on March 18, 2020 by the Prime Minister and Finance Minister.” Read moreInternational: The Colombian government issued a new regulation that establishes the regulatory framework to commercialize master cannabis preparations for Colombian medicinal cannabis, a market estimated to comprise some 5 million patients. On March 2, the Ministry of Health issued Resolution 315, which not only opens up the Colombian market for medicinal cannabis but also allows the transformation of dry cannabis flower into derivative products for companies that set up industries at free trade zones. Read moreSANTA ROSA, Calif.—March 27, 2020—PRESS RELEASE—Emerald Harvest, the global hydroponics nutrient manufacturer, has joined the battle against COVID-19 with several initiatives aimed at aiding the community, local government and national health organizations.
CEO Rob Higgins is offering the company’s facilities and capabilities to the World Health Organization, the Center for Disease Control and the government of California for storage, supply staging or medical use.
“We have space in California that we are making available in anticipation of any potential need,” Higgins said. “We also have a state-of-the-art mixing and bottling facility that we can set up to help where we can.” Emerald Harvest’s production equipment includes deionized water systems, UV water treatment, an on-site lab and analysis capability. “We deal with chemicals and hygiene procedures every day. If someone needs our capabilities, we can help.”
Emerald Harvest recently acquired a new 20,000-square-foot warehouse to accommodate higher production. The company’s distributor, Hawthorne Gardening (a division of Scotts Miracle-Gro Company), has offered to remove all inventory from this warehouse to free up usable space.
Located in Santa Rosa, Emerald Harvest is no stranger to community assistance during public emergencies. California has recently borne the brunt of devastating wildfires.
Despite it being the first full year that hemp cultivation was legal in the U.S., 2019 was a tough year for many along the supply chain.
Denver-based cannabidiol (CBD) giant Charlotte’s Web can attest to that, especially for the tail-end of the year. The company’s latest earnings report shows it lost $18.8 million in Q4 of 2019, a steep tumble from the $3.2 million in net income it earned in the same period the year prior.
The story for the full year includes another substantial fall. The company reports a loss of $15.6 million for all of 2019, compared with $11.8 million net income in 2018—a 232% decrease from the year prior.
During a recent earnings call, CEO Deanie Elsner attributed the Q4 loss to a slowdown of growth in the food/drug/mass (FDM) retail channels because of regulatory uncertainty, as well as an oversaturation of products in the market.
In December of 2019, the U.S. Food and Drug Administration (FDA) issued several warning letters to CBD companies for violating labeling regulations. Afterward, the FDA issued a consumer update, where it questioned the safety of CBD and emphasized that it has only approved one form of the cannabinoid for market.
Like other companies, Elsner said those comments had resounding consequences and caused consumers to pull back “across all channels.”
San Diego, CA – March 17, 2020 — PRESS RELEASE — Agnetix, a digital horticulture lighting company with world benchmarks in energy efficiency, light output and intelligent data insights, has announced the appointment of Sanaz Jarolmasjed, Ph.D. to the new role of Director of Biological and Machine Vision Systems.
Jarolmasjed is a biosystems agriculture engineer and data scientist with unique experience applying machine learning models and leading teams to solve challenging problems in business, horticulture and research settings. Together with Agnetix co-founder and CTO Dr. Ihor Lys, Jarolmasjed will lead the scientific and technical development of the Agnetix data insights platform that will bring a new level of innovation to global horticulture markets.
“Dr. Jarolmasjed hyper-focused expertise in the areas of deep learning, AI and image processing aligns perfectly with the Agnetix vision and technology roadmap,” said Lys, “She will lead a first-of-its-kind multi-spectral imaging and algorithm program that will propel the future of horticulture.”
Jarolmasjed is also an established contributor to machine learning research with nine peer-reviewed publications and over 300 citations. For more information, visit www.agnetix.com or contact Agnetix at [email protected] to learn more.
The COVID-19 pandemic is forcing governments worldwide to take drastic measures to “flatten the curve” and reduce economic fallout, and Canada is no exception. The Great White North closed its border with the U.S. for all non-essential travel (goods are not included in that shutdown), shuttered schools, colleges and universities across the country, and provinces are taking steps to stop all non-essential businesses.
The Canadian cannabis industry, for the most part, can operate as normally as it can. Dispensaries are conducting business with social distancing measures in place, deliveries can be made—although Canada Post will no longer deliver cannabis packages to purchasers’ homes, opting instead for postal office pickup to minimize delivery person exposure—and cultivation sites continue to operate.
Both the Quebec and Ontario governments have deemed cannabis cultivation and retail businesses “essential” to the marketplace and, as such, can remain open during each province’s mandatory shutdown. Other provinces such as Alberta are considering similar proposals.
Some companies, however, are taking extra steps to ensure their employee’s, patients and consumers safety. For example, Canopy Growth, a vertically integrated LP, closed its retail storefronts on March 17. “We have a responsibility to our employees, their families, and our communities to do our part to “flatten the curve” by limiting social interactions. For us, that means shifting our focus from retail to e-commerce,” said David Klein, Canopy’s CEO, in a press release. “This is a big decision but it was also an easy one to make – our retail teams are public-facing and have been serving an above-average volume of transactions in recent days. Given the current situation, it is in the best interest of our teams and our communities to close these busy hubs until we are confident we can operate our stores in the best interest of public health.”
The company is keeping its cultivation operations open but is asking that all employees who can work remotely do so, said Canopy’s VP of Communications Jordan Sinclair in a March 24 email to CBT. The company recently closed facilities in Aldergrove and Delta, British Columbia, and scrapped plans for a third greenhouse at its Niagara-on-the-Lake location in Ontario, both unrelated to the COVID-19 outbreak.
Amid a reported surge in demand, Aurora Cannabis’ “production facilities remain fully operational and … have not experienced any disruptions to regular operations, including [to the] existing supply chain,” said Michelle Lefler, Aurora’s VP of Communications in a March 20 email to CBT. The company is taking steps to mitigate risks, Lefler said, including “implementing good hygiene practices and illness prevention measures across our organization.”
BOCA RATON, Fla., March 25, 2020 (GLOBE NEWSWIRE) -- PRESS RELEASE -- Jushi Holdings Inc., a globally focused, multi-state cannabis and hemp operator, is providing shareholders with an update on its operations during the month of March, and its company-wide response to COVID-19. Jushi maintains that the health and safety of its patients, customers and employees is the company’s number one priority during this global crisis.
As of March 25, Jushi’s dispensaries received the “life-sustaining” business designation in Pennsylvania and the “essential services” designation in Illinois. As a result, the company’s six dispensaries in Pennsylvania, operating under the brand “BEYOND/HELLO,” and its two dispensaries in Illinois, operating under the brand “The Green Solution” (transitioning to BEYOND/HELLO branding later this year), will remain open. The company acquired the two Illinois dispensaries on January 30 and has subsequently begun serving adult-use customers at its Sauget location as of March 2. Through the first three weeks of March, company-wide retail revenues were approximately $3 million, an increase of approximately 70% as compared to February 2020.
The company is announcing several initiatives prioritizing its medical patients and customers most susceptible to COVID-19 during the pendency of the COVID-19 outbreak:
Pennsylvania – Effective immediately, BEYOND/HELLO dispensaries will only serve patients 50 years or older in the first hour of operations. Curbside pick-up will begin to be offered at three PA dispensaries starting March 30th (1).Sauget, Illinois – Beginning March 30, The Green Solution dispensary will only serve medical patients on Mondays. In addition, starting on March 31, The Green Solution dispensary will serve only medical patients and customers 50 years or older during the first hour of operations. Curbside pick-up will also be offered to medical patients beginning March 26.Normal, Illinois – Beginning March 31, The Green Solution dispensary will only serve patients 50 years or older in the first hour of operations. Curbside pick-up will also be offered to medical patients beginning March 26th.(1) Curbside pick-up available at Bristol, West Chester and Scranton, Penn. locations.
In accordance with the guidance of the Centers for Disease Control and Prevention (CDC), Jushi made essential changes to promote a healthy and safe operating environment for all of its patients, customers and employees, including:
In the wake of the COVID-19 global pandemic, U.S. and Canadian cannabis companies have a unique opportunity to aid those in need. Not only are their cannabis products increasingly being deemed essential by governments—but they also have the facilities, personnel and protocols already in place to fill the desperate need for medical supplies.
These three companies are using those advantages to help their communities.
Aloha Green Apothecary
In Hawaii, Aloha Green Apothecary is producing hand sanitizer for its employees and patients, with plans to ramp up production as much as possible to donate hand sanitizer to other businesses and organizations in the state.
“We’re just trying our best to meet our patients’ needs and follow the law with all the changes in law that the government is laying down,” Tai Cheng, a spokesperson for Aloha Green Apothecary, told Cannabis Business Times.
The vertically integrated company, located in Oahu, has been deemed essential after all non-essential businesses were ordered to shut down. And since the outbreak, sales have increased.
As more and more states are shifting to a work-from-home environment and closing down non-essential businesses, we have seen a conflict in gubernatorial instructions on whether cannabis is a protected class of business that falls under “essential infrastructure” or “essential business.” Earlier this week, we compared the approach New York and California have taken to permitting businesses to continue to operate.
The former, medical-only state received a carte blanche endorsement as an essential business in New York to provide (often immunocompromised) patients with necessary medication. California, on the other hand, remained silent in executive orders, and left it up to local mayoral representatives to make determinations as they saw fit and best for their respective communities.
Massachusetts has taken a middle road, as Governor Charles D. Baker issued COVID-19 Order No. 13 on March 23, 2020 which becomes effective March 24, 2020 at noon. This order identified an extensive list of “COVID-19 Essential Services”. As with California and New York, cannabis-related business were not explicitly listed on the list of essential services, but rather addressed in an addendum by the Massachusetts Cannabis Control Commission (“MCCC”).
Progression to Shut-Down
In an effort to contain the spread of the virus, the Massachusetts Cannabis Control Commission issued an “Industry Bulletin on the Coronavirus State of Emergency” on March 13, 2020 which highlighted mitigating measures that licensees and certifying health care providers should use to ensure, preserve, and promote public health. Futhermore, the MCCC recommended that Medical Marijuana Treatment Centers (dispensaries) may consider the “promotion and geographic expansion of delivery service and to remind patients of the ability to acquire up to a 60-day medical grade medical marijuana supply.” This language and recommendation regarding delivery service parallels the actions of many other states such as New York, Michigan, and Washington. (Curiously, Illinois Department of Financial and Professional Regulation would relax laws relating to curb-side delivery on public walkway adjacent to the dispensary, but direct delivery was still prohibited.)
On March 23, 2020 the MCCC issued a formal Summary Cease and Desist Order (Case No. 2020AM-0001, 935 CMR 500.350: Cease and Desist Order and Summary Suspension Order) which clarified and expanded the prior directives of the MCCC in line with Governor Charles D. Baker’s March 23, 2020 Covid-19 Order No. 13 (Essential Services Order).
This Order went into effect on March 24, 2020 at 12:00 noon EST and formally excluded all licensed Marijuana Establishments and Medical Marijuana Treatment Centers conducting adult-use retail at non-colocated premises as non-essential functions. (Co-located Marijuana Operations under Massachusetts law are defined as an entity operating under both a RMD registration pursuant to 935 CMR 5001.000: Medical Use of Marijuana and under at least one Marijuana Establishment license pursuant to 935 CMR 500.000: Adult Use of Marijuana on the same premise.) These establishments were ordered to close their physical workplaces and facilities to workers, customers, and the public as of noon and not to re-open before 12:00 noon on April 7, 2020. Independent testing labs providing the required testing to medical-use operations were not subject to the Cease and Desist Order.
PRESS RELEASE - Vertical Air Solutions has announced its new UVC integrated pathogen control system. In these times of heightened awareness around the importance of clean environments, Vertical Air Solutions is accelerating availability of its new offering. The UVC light system fits into Vertical Air Solutions' air mixture chamber seamlessly, reducing the instance of powdery mildew and other pathogens.
What is the ultraviolet (UV) light?
Ultraviolet light (UV) is a form of invisible light to the human eye. It occupies the part of the electromagnetic spectrum between X-rays and visible light. The sun emits ultraviolet light but most of it is absorbed by the Earth’s ozone layer.
UVC Rays
The UVC (254nm) lights are the same wavelength produced by the sun. The UVC wavelength attacks the micro-organisms on a molecular level deactivating and destroying the contaminants.
Utah patients can now access medical cannabis with recommendation letters from their medical cannabis providers after a new law took effect March 25, according to a KUTV report.
To qualify for a recommendation letter, patients must live in Utah and be diagnosed with a qualifying condition, the news outlet reported. Medical doctors, osteopathic physicians, advanced practice registered nurses and physician assistants can all provide patients with recommendation letters stating that a patient has been diagnosed with a qualifying condition, and medical cannabis pharmacies must receive independent confirmation from patients’ medical providers stating that the letter is valid. Patients must also present a valid form of photo identification at the medical cannabis pharmacy with the recommendation letter, KUTV reported.
Qualifying patients can continue to access medical cannabis with recommendation letters until Dec. 31, at which point they must obtain a medical cannabis card from the Utah Department of Health, the news outlet reported. In addition, patients accessing the medical cannabis program with recommendation letters must purchase all their medical cannabis products from the same pharmacy until they receive a card.
The change in law is part of House Bill 425, which lawmakers passed in the latest legislative session and which Gov. Gary Herbert signed into law, KUTV reported.
Since patient registration opened March 1, Utah has issued 1,076 medical cannabis cards, according to the news outlet, while 203 medical providers have registered to participate in the program. While there is currently only one medical cannabis pharmacy open in Utah, 13 more are expected to open by the end of the year.
In a lawsuit over breach of contract, a Kentucky hemp farming company is arguing that its agreement with an Oregon hemp processing company should be terminated because of the coronavirus.
Third Wave Farms, headquartered in Mount Vernon, Ky., signed a contract with Canby, Ore.-based Pure Valley Solutions in May 2019 to act as a broker for Pure Valley’s winterized cannabidiol (CBD) oil. The contract required Third Wave to sell up to 5,000 liters of it, according to the lawsuit.
In the contract, Third Wave also said it was still working to raise the $2 million it needed to fulfill its agreement.
That contract quickly crumbled on both sides. According to the lawsuit, Pure Valley never had the capacity to make 5,000 liters of CBD oil, and the oil it did make didn’t meet the contract’s specifications. Meanwhile, Third Wave never raised its $2 million.
Because both ends failed to meet their obligations, Third Wave said it believed the contract was no longer in effect. Yet, in February, Pure Valley sent a bill to Third Wave demanding $9 million, along with an interest rate of 9% and nearly $10,000 in storage fees for every day Third Wave didn’t ship the oil.
Now, in a lawsuit moving through the U.S. District Court for the Eastern District of Kentucky, Third Wave Farms, LLC v. Pure Valley Solutions, LLC, Third Wave is arguing the contract should be terminated because neither side fulfilled their obligations.
DENVER, Colo. - March 24, 2020 - PRESS RELEASE - The Colorado Department of Revenue (CDOR) has released the Average Market Rates (AMR) for retail marijuana effective April 1, 2020 until June 30, 2020.
Three of the seven AMR categories decreased this quarter, including bud ($1,164), trim ($319) and wet whole plant ($176). Bud allocated for extraction ($744) and trim allocated for extraction both increased ($250), while immature plant ($9) and seed ($5) rates stayed the same.
The AMR is the median market price of each category of unprocessed retail marijuana that is sold or transferred from retail marijuana cultivation facilities to retail marijuana product manufacturing facilities or retail marijuana stores. CDOR’s Office of Research and Analysis, in coordination with the Taxation Division and the Marijuana Enforcement Division (MED), calculates AMRs quarterly for use in levying the excise tax as required by Colorado statute.
The April 1 AMR was calculated based on retail marijuana transactions from Dec. 1, 2019 through Feb. 29, 2020 in MED’s marijuana inventory tracking system. AMR is an estimate of the typical prices of each category of unprocessed retail marijuana that is sold or transferred from marijuana grows to product manufacturers or stores.
Visit the Taxation Division’s website for more information, including the methodology of the AMR calculations and current and prior AMRs.
With crisis comes the need for insurance coverage. It’s not top of mind right now, nor should anyone expect it to be, but business models and short-term outlooks are changing dramatically each day, and now may be a good moment to ensure that management teams are prepared.
Mike Sampson, partner in Reed Smith’s Insurance Recovery Group and co-vice chair of its Cannabis Law Team, says that business owners would do well to familiarize themselves with their insurance policies before the time comes to file a claim on some unexpected hardship.
There are several types of coverage that are in play now, as the coronavirus outbreak continues to spread across the globe and force incredible economic pressure onto small businesses.
Business interruption coverage is often a component of a company’s property insurance policy. For example, a standard policy might cover damage to a building or to personal property within. That policy may then include additional lines of coverage for situations that infringe on a business’s day-to-day operations.
Examples include: business interruption with time element coverage, for when your business experiences covered property damage and as a result experiences continued operational losses precipitated by that damage. There’s also extra expense coverage, for when a business incurs extra costs to continue operations after covered property damage.
Zooming out to the cannabis business supply chain, there’s also contingent business interruption coverage: This is triggered when it’s not your business that suffers the property damage, but rather a third party business is hit with some level of property damage that suspends normal operations—thus affecting you. Further up the supply chain, this includes vendors and, say, vape battery manufacturers.
Maine’s Office of Marijuana Policy (OMP) released a memo March 24 indicating that while medical cannabis dispensaries are considered essential businesses under the state’s coronavirus policies, the launch of Maine’s adult-use cannabis market, which was slated for June, will likely be delayed due to the pandemic.
The announcement is the latest in a series of delays for the adult-use market, which voters legalized in 2016.
The OMP sent its memo to the state’s licensed medical cannabis businesses, as well as applicants seeking adult-use licenses, according to a Portland Press Herald report. The memo urges existing medical cannabis businesses to review their operating procedures and find areas to improve upon, including increased sanitary protocols and managing patient lines and interactions in compliance with social distancing guidelines.
The memo also indicates that the OMP has heard concerns from dispensaries and caregivers about staff shortages as employees self-quarantine, and the agency said it will work with the industry to process caregiver assistant and dispensary employee applications.
The fate of the state’s adult-use market launch is less clear.
Recent coronavirus response measures in Denver and Colorado have been keeping attorney Alyson Jaen’s attention lately as the industry works to maintain compliance.
At 5 p.m. MDT on March 24, Denver’s stay-at-home order went into effect in response to the coronavirus. The previous day, Mayor Michael Hancock said adult-use businesses and liquor stores are nonessential, but reversed course a few hours later after an “outcry” and let the businesses remain open, according to The New York Times.
Facing orders to stay in their homes and the possibility of not being able to purchase product when they do leave their homes, demand among adult-use customers increased 140% on March 23 before the mayor said adult-use businesses are essential, said Jaen, who is head of Denver-based Fortis Law Partners’ cannabis practice.
“It was in a matter of hours [that] we had a huge pivot—'Yes, you're open,' 'No, you're not.’” she said. “That creates confusion and this idea of panic-buying.”
Previously, on March 20, Colorado Gov. Jared Polis issued executive orders that allowed dispensaries to temporarily offer curbside pickup through mid-April and for doctors to be able to remotely issue medical cards, according to Westword.
“You can now call in your order or do it online and then come to the curbside to pick it up, to try and help with social distancing because there's been such a spike in the demand,” Jaen said. “You were hearing stories about overcrowded dispensaries—there was definitely not six feet between people. So, they're adapting to figure out what to do in the interest of public safety and health and wellness.”
Cannabis businesses have long struggled with Internal Revenue Code Section 280E, which addresses the tax consequences of cannabis’s federally illegal status and severely limits which expenses cannabis operators can deduct when filing their federal tax returns.
While companies cultivating, manufacturing and selling marijuana-based products can only deduct the cost of goods sold under 280E, hemp operators don’t have the same limitations since the 2018 Farm Bill federally legalized industrial hemp. In fact, according to Sanjay Agarwal, an international and corporate tax partner of MGO | ELLO’s National Cannabis Practice, everything, generally speaking, is deductible for a company operating in the legal CBD/hemp industry.
“You also have the ability to sell CBD/hemp across state lines, which is beneficial,” Agarwal tells Hemp Grower. “Rather than just looking at your state where you’re headquartered, you’re able to sell your product into all the other 49 states, and you’re also able to sell internationally, too, for the most part, which is beneficial.”
Here, Agarwal outlines three guiding principles for hemp operators this tax season, from the structuring of the business to incentives to sell products to a broader global market.
1. Separate your hemp business from any marijuana operations.
Many marijuana companies are expanding their operations into the newly legal industrial hemp and CBD markets, and Agarwal says it is critical for these businesses to separate those operations into two entities.
While COVID-19’s full effects on the cannabis industry remain uncertain, there are common challenges that most businesses are currently facing and there are steps companies can take to protect themselves in these uncertain times.
“We have weekly calls with our law firm leadership and a theme is uncertainty, as I’m sure it is with other businesses,” Joseph Bedwick, co-chair of Cozen O’Connor’s Cannabis Industry Team, tells Cannabis Business Times. “Everybody is doing what they can to weather the storm, and cannabis businesses are no different. They’re a regulated industry, but they are, at their heart, a business that just needs to weather the storm like any other business.”
Here, Bedwick outlines some of the broader trends he’s seeing in the market, the frequently asked questions from his clients and what the industry might look like at the end of this global pandemic.
Cannabis Business Times: What are some of the broader market trends that are unfolding in the wake of the COVID-19 outbreak?
Joseph Bedwick: As a general comment—and this is not unlike any other client in every other industry—there’s just a lot of uncertainty. I’m an M&A attorney by trade, and deals have slowed, naturally. People are not able to meet in person. They’re not able to carry on their business as easily and as frequently as they’ve done, and frankly, people aren’t as willing to invest money at this time. I had one deal where things were just put on hold because the buyer wanted to tread a little lighter. I think you see that, and that’s part of a national trend, at least in the M&A landscape.
CBT: What are the main challenges that your cannabis clients are facing right now? What are some frequently asked questions you’re getting from the industry?
JB: On the cannabis-specific side, one of the things that all dispensary clients that have come to us have been concerned about is just, is a medial marijuana dispensary going to be considered an essential business? Generally, states are delineating between essential functions and non-essential functions, which is why our law firm is closed. My children are doing distance learning from school. Bars are closed. Grocery stores, pharmacies and gas stations are allowed to remain open and restaurants are allowed to remain open for drive-thru and takeout. What we’ve seen by and large is medical marijuana dispensaries are falling under the essential category. That has relieved a lot of my clients, especially in California, where they have the shelter in place [order] in San Francisco in the Bay Area. In Southern California, the localities have deemed marijuana dispensaries to be essential and they can remain open. That’s been one concern by our clients and questions that we’ve talked through.
