Coronavirus & Cannabis Don’t Mix, at Least to the Feds

The pandemics revealing just how important cannabis now is to millions, including increasingly cash-strapped state and local governments. 

Illustration of corona virus and cannabis being disinfected by Uncle Sam Source: Wikileaf

Even as cannabis advocates report some emerging bright spots, the nation’s relatively young marijuana industry is having a rough quarantine, leaving the future of many mom and pop firms currently cloaked in mystery.

But the pandemic’s revealing just how important cannabis now is to millions, including increasingly cash-strapped state and local governments. 

Even with most American legislative bodies – local and national alike – remaining shuttered in the midst of quarantine orders from coast to coast, there’s still been a flurry of cannabis news flying the past few weeks. 

Many of America’s cannabis firms remain trapped in a catch-22 created by the nation’s elected leaders: In many states that have legalized cannabis in one form or another, dispensaries have been exempted from quarantine orders because local officials view them as essential services, yet they’re still denied access to federal stimulus money because cannabis remains classified as a schedule 1 drug – the same as LSD and heroin.   

The more than $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act that Congress passed in March explicitly excludes any companies involved in businesses the federal government has deemed illegal from accessing the mountains of cash officials are distributing to companies large and small. 

That’s left at least 44 federal lawmakers – 34 from the House and 10 from the Senate, of both parties – vacillating between frustration and anger. Back in April, the group penned a letter urging party leaders in Washington to assist their local cannabis companies. 

“The state-legal cannabis industry is a major contributor to the U.S. economy and workforce, employing over 240,000 workers across 33 states and four territories, and generating $1.9 billion in state and local taxes in 2019,” the lawmakers wrote. “State-legal cannabis businesses need access to CARES Act programs to ensure they have the financial capacity to undertake the public health and worker-focused measures experts are urging businesses to take.”

No assurances of any federal assistance have been made, which leaves most of the tens of thousands of employees of cannabis companies from coast to coast in a federally-mandated murky zone – one where there’s only one thing that’s assured: The federal government isn’t and (at least for the foreseeable future) won’t be there for you. 

And that dynamic doesn’t seem to be changing anytime soon. That’s mostly because of Senate Majority Leader Mitch McConnell. Thus far, he’s refused to budge on his desire to wall off all of the nation’s cannabis companies – from growers to delivery people – from federal aid in the midst of this pandemic. It’s almost like they’re not even second-class citizens to McConnell – they’re not even humans in his mind. 

“He knows that this is an issue. This is something that we’ve been pushing through backchannels over on the Senate side,” an aide to a senior House Democrat told Wikileaf. “It seems pretty bleak.”  

Pot-proponents in Congress have taken to Twitter to try and build pressure. 

“By not allowing legal marijuana businesses to access the same #COVID19 relief as other #smallbiz, we are putting hardworking people at risk,” Rep. Jared Huffman (D-Calif.) recently tweeted out. “The cannabis industry is a part of the North Coast economy, and I’ll keep working to ensure they get equal relief.” 

The pressure campaign hasn’t worked yet, and McConnell doesn’t seem to be budging. And House Speaker Nancy Pelosi’s staff doubts that he ever will. So while she’s now publicly backing a measure to allow cannabis firms to access the U.S. banking system, her staff privately dismisses the proposal’s chances and write it off as dead on arrival in McConnell’s Senate. 

Even without federal assistance in their time of need, cannabis businesses have been working overtime, in part because coronavirus – as devastating as it is – has ushered in a new day for marijuana in the eyes of many in the nation’s political class. 

The Good, the Bad and the Ugly News 

Still, it’s been a mixed bag for marijuana businesses up and down the supply chain.  

First the good news. In some states and cities, the combination of the public health and economic crisis have forced lawmakers to upend previous restrictions on cannabis so that residents can get the products they’ve come to rely on as medicine or a non-alcoholic relaxant. 

Even if Congress, which has veto power over what elected officials in the District of Columbia do, still ties the hands of locally-legal recreational marijuana business owners in the nation’s capital, local leaders upended their regulations and now allow medical marijuana dispensaries to deliver to patients. 

Many states, including California, Nevada and Colorado, also tossed out their old rulebook and are now allowing curbside cannabis pickup during the pandemic.

In Denver, Mayor Michael Hancock found out the hard way that cannabis is now king when he initially closed recreational dispensaries only to receive such a push back, along with massive lines of people clamoring to get their green, that within hours he reversed course and deemed them essential. 

In Maryland, New Jersey and Nevada there’s even now an app that lets customers avoid lines by ordering and then sitting in their cars – as opposed to long lines – until their order is ready.   

And in Pennsylvania, cannabis even beat booze when state officials shuttered liquor stores while giving marijuana dispensaries the green light to keep operating. While in Baltimore, State’s Attorney Marilyn Mosby moved to deprioritize drug possession during this pandemic, which includes marijuana (even if most users and a growing number of doctors and researchers no longer consider it a drug…). 

A Few Bad Apples

While many localities have bent backward in order to quickly upend state or local regulations so they can accommodate cannabis consumers – and the dispensaries they rely on – a few bad apples have threatened to taint the entire batch. And the most notable bad apples aren’t even cannabis firms; they’re just marijuana’s kissin’ cousin, CBD.  

Players in that burgeoning industry have already been targeted by the federal government. The Food and Drug Administration (FDA) has sent “WARNING” letters to a few CBD firms who they accuse of lying to the public with claims that their products are an antidote to COVID-19.  

“The FDA has observed that your website offers CBD products for sale in the United States and that these products are intended to mitigate, prevent, treat, diagnose, or cure COVID-19 in people,” the letter reads. “Based on our review, these products are unapproved new drugs…” 

That’s partly why there’s been fear amongst some pot-proponents that these new coronavirus-cannabis experiments taking place at the state and local level – with no federal approval or assistance; just threatening letters being penned to those they perceive as the most rotten and disgusting apples out of bushels of pristine ones – could actually backfire on the industry. 

“It is absolutely crucial that the cannabis industry hold themselves to the highest of standards right now to protect public health, to not be a distraction as our nation now mobilizes to confront this pandemic through every sector of the economy,” as Justin Strekal, the political director for the marijuana advocacy group NORML, told Wikileaf. 

Most employees at cannabis companies have evolved and adapted – per their usual – to the pandemic. But there are some things out of employees and business owner’s hands, which brings us to the bad news. 

Coronavirus Buries Cannabis Legislation

With governors and state legislatures in control of the nation’s disparate, locally run cannabis laws, some localities aren’t rolling out the red carpet for the industry. And Massachusetts’ residents may be the biggest losers. The state’s Republican governor, Charlie Baker, deemed medical marijuana dispensaries “essential,” even as he shuttered recreational cannabis firms. 

In New York, Gov. Andrew Cuomo (D) and legislators waited, while bickering over how to divvy up all the new tax revenue, then they bickered and waited some more. So long in fact that Cuomo and company now claim they’ve been so overwhelmed with responding to the pandemic that they agreed to shelf Cuomo’s promise to legalize recreational marijuana this year (though he’s conveniently floated the idea of passing virtually what he failed to do in person). 

Revenue projections in New York from legal, recreational cannabis sales alone are estimated to be between more than $400 million to as much as $1.3 billion. Tax revenue estimates for smaller states pale in comparison to those numbers, but any extra dollar is precious to governors now facing massive budget shortfalls. 

“If there was ever a time for wishful thinking: I wish we had passed recreational cannabis because that would be $100 million,” Gov. Michelle Lujan Grisham (D-N.M.) recently said. 

 
But wishful thinking and pandemics don’t mix well. People want results, not dreams, right now. And many dreams are being dashed right now, including for marijuana advocates in Idaho and Missouri where coronavirus has curtailed the ability of voters to fully weigh in on cannabis this November. 

In Idaho, the push to get medical marijuana on the ballot in 2020 was upended by coronavirus, because advocates just couldn’t get the needed signatures to qualify as a ballot initiative after officials issued stay at home orders. The same thing happened with efforts to legalize recreational cannabis in Missouri. 

That’s likely to negatively impact those states, and others, as Marijuana Policy Project Executive Director Steve Hawkins penned in a recent op-ed.  

“….as we dare to look beyond the crisis, it seems clear that states with legal cannabis markets will have a significant advantage over other states as the economy recovers from this pandemic,” Hawkins wrote in Marijuana Moment.

“More than 200,000 Americans already work in the state-legal cannabis industry, demonstrating that cannabis can be an important job creator and driver of economic development in addition to being sensible public policy and a source of substantial tax revenue.” 

Still, in the midst of the crisis, cannabis firms have no firm projections on their near, mid-term and future growth. 

Many marijuana companies witnessed massive spikes in sales at the start of lockdown orders – with some dispensaries even reporting a doubling of their sales or profits in the first half of March – but the spikes seem short-lived. Once people were locked down, businesses in some states have faced a government-mandated slump. Nevada saw a 15 percent decline in cannabis sales from this time last year, while Colorado sales were down 21 percent

This topsy-turvy landscape has many cannabis advocates bracing for dispensary closures in the coming months and then further bracing for big venture capital firms or other wealthy investors to come in and buy out other struggling firms, which could reshape the cannabis industry – turning what was even recently a mom and pop dominated industry into a corporate-owned and operated one.  

That outlook has many people across the industry worried, even as this global pandemic has forced many elected officials to reach the conclusion many advocates already knew: Cannabis is now essential to the well being of millions of Americans, with or without the approval of Uncle Sam. 

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