Marijuana firms aim to leverage ‘essential business’ status amid COVID-19 economic slide

Marijuana firms

 declared essential during the coronavirus outbreak are hoping to leverage newly allowed flexibility such as curbside pickup and home delivery into permanent ways of doing business.

They also believe this is an ideal opportunity to seek additional regulatory relief and other reforms to help fend off challenges related to the economic downturn resulting from COVID-19.

The emboldened marijuana industry also hopes to accelerate legalization efforts, especially given that states are becoming financially strapped amid economic shutdowns related to coronavirus.

“Cannabis is going to be an important part of the economic recovery. … I think, first and foremost, is tax revenue,” Adam Goers, vice president of corporate affairs for New York-based multistate operator Columbia Care, said during a recent media briefing sponsored by the Cannabis Information Project.

The Cannabis Information Project is made up of 12 of the largest marijuana operators in North America, with a mission that includes communicating the benefits of the industry to the public, regulators and other cannabis stakeholders.

According to industry officials, more flexible regulatory regimes and marijuana laws offer a potential win-win for companies and governments including:

  • Additional sales for cannabis businesses.
  • Significant tax revenue and job growth for states and municipalities at a time they need it most.

Such flexibility also would help state-legal marijuana businesses stem losses to illicit markets, another benefit for both the industry and communities.

The industry wish list depends on the location, but here are a few examples:

  • Permit curbside pickup and home delivery as permanent options going forward in states that are now allowing it on a temporary basis.
  • Add smokable flower and physician discretion to New York’s medical marijuana industry, which currently is one of the most restrictive MMJ programs in the country.
  • Ease investment restrictions. In Oregon, for example, state regulators must approve any loan to a marijuana business that exceeds $100,000.

Industry officials said the cannabis industry has shown during the coronavirus pandemic it can operate responsibly in an environment with more flexibility such as curbside pickup and home delivery.

Chris Melillo, senior vice president of retail operations for Massachusetts-based Curaleaf said: “I also think it’s a great opportunity to continue to lobby for change for patients and customers.”

But policy changes at the state level are going to reach only so far, industry officials said.

“Without any changes on the federal level and even on a state level, it’s undoubtedly true that we’re going to see bankruptcies, we’re going to see liquidations, we’re going to see job losses along the way,” Columbia Care’s Goers said.

Short of nationwide legalization, industry officials see several federal reforms as crucial:

  • Banking access.
  • Tax equity. Marijuana companies, because of their federally illegal status, currently are prevented under Section 280E of the IRS code from taking business tax deductions.
  • Insurance reimbursement for medical marijuana patients.

Home delivery could remain long-lasting

The coronavirus crisis not only compelled some states to deem marijuana companies essential but also ushered in a new way of doing business with online ordering, curbside pickup and home delivery.

Kelly Fair, U.S. general counsel for Canadian-based Canopy Growth, noted that Colorado issued its first marijuana delivery license during the COVID-19 pandemic, a measure long advocated for by the cannabis industry and finally passed by state lawmakers last year.

A number of states have permitted and encouraged delivery during the coronavirus crisis, and more than a dozen states put in place regulations allowing curbside pickup.

Fair said she believes these changes will extend beyond the pandemic.

Rather, she noted, they also are “signaling some broader policy changes in how jurisdictions allow dispensaries to operate.”

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