In an effort to stem the tide of COVID-19 transmission, many state and local governments have enacted “shelter-in-place” or “stay-at-home” orders to protect the health and well-being of citizens, and to establish a consistent approach to slow the spread of COVID-19.  Many of these orders identify certain services as essential, including food, prescriptions and healthcare, that can continue to operate despite the “stay-at-home” order.  In many jurisdictions, cannabis dispensaries have been labeled “essential” businesses, and identified under the headings for healthcare, consumer products or agriculture included in the respective order’s “critical” infrastructure or services.

This article addresses cannabis-related exemptions in four jurisdictions that have implemented mandatory “shelter-in-place” executive orders – California, Dallas, Illinois and New York.

Perhaps not surprisingly, cannabis sales overall (medical and adult-use) have increased in California, Colorado, Nevada, Oregon, and Washington since the beginning of the COVID-19 pandemic.  By way of example, according to cannabis data company Headset, on March 16, 2020, Oregon saw sales about 75% higher than usual.  Headset also determined customers were buying 29% more cannabis at once in Colorado.  Eaze, a California cannabis delivery service, self-reported a 38% increase in average order volume, with 31% more deliveries and 51% more first-time deliveries.  Given this bump in popularity and consumption, exemption from these “shelter-in-place” orders is especially welcome news to cannabis retailers and operators.

Any cannabis licensee that continues to operate must adopt social distancing and anti-congregating measures, and must follow the Center for Disease Control and  Prevention’s Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease at all times.  Licensees must also adhere to the Occupational Safety and Health Administration’s regulations relating an employee’s right to refuse dangerous work.

Lastly, it is important to note that while the federal government has not issued a nationwide mandatory self-quarantine, the federal government still prohibits cannabis activity.  Therefore, the U.S. Department of Homeland Security – CSIA’s Guidance on Essential Critical Infrastructure Workforce does not cover cannabis operators and/or employees.

California

Effective March 20, 2020, California’s Governor Gavin Newsom issued Executive Order No. N-33-20 (the “California Order”), implementing Statewide “Shelter-in-Place.”   The California Order, which does not include a sunset date, identifies certain services as essential, including food, prescriptions, and healthcare, that can continue despite the “stay-at-home” Order.

Since the California Order’s initial issuance on Thursday, the California Department of Public Health (“CDPH”) issued a new directive Saturday morning permitting cannabis dispensaries to remain open for business during the lifetime of the California Order.  Pursuant to CDPH, because cannabis is an essential medicine for many residents, licensees may continue to operate at this time as long as operations comply with local and state rules and regulations.  A March 22ndupdate to the order also lists workers supporting cannabis retail as “essential workforce” for the support of the food and agriculture sector.

The California Order comes after a number of local governments previously implemented shelter-in-place regulations, many of which expressly permitted continued operation of cannabis dispensaries as essential healthcare and/or consumer products.  As originally signed by Governor Newsom on Thursday, the California Order was less express than these local directives and did not include similar authorization, resulting in confusion for many cannabis operators as to the prevailing regulations.  CDPH’s addition to the California Order eliminates this inconsistency.

More information on the California Order is located here.

Dallas

On March 22, 2020, the Chief Executive Officer of Dallas County, Texas (County Judge Clay Jenkins), issued a “Stay Home Stay Safe” order for residents of Dallas County (“Dallas Order”).  The Dallas Order took effect at 11:59 p.m. on March 23, and continues until midnight on April 3rd.

Medical cannabis is legal in Texas, including Dallas County, in very limited circumstances.  Texas Governor Greg Abbott signed the Texas Compassionate Use Act into law in 2015, allowing people with epilepsy to access cannabis oil with less than 0.5% THC.  In 2019, he signed House Bill 3703, which expanded the list of qualifying conditions to include diseases such as multiple sclerosis, Parkinson’s disease and Lou Gehrig’s disease, or ALS.  Because the Dallas Order permits the continued operation of pharmacies, access to medical cannabis for qualifying patients with a doctor’s approval will remain in place.

At the present time, there is no express carve out for any medical cannabis distributors/retailors outside the confines of a “pharmacy.”

More information on the Dallas Order is located here.

Illinois

Effective March 21, 2020, following the advice of leading public health experts, Illinois’s Governor JB Pritzker issued COVID-19 Executive Order No. 8 (the “Illinois Order”), implementing a Statewide “Stay-at-Home” mandate.   The Illinois Order, which will extend at least until April 7th, identifies “essential” business and government functions, including grocery stores and pharmacies that can continue to operate despite the Order.

From the onset Illinois’s Order expressly identified medical cannabis dispensaries as essential business under the umbrella of “Healthcare and Public Health Operations.”  Interestingly enough, the Illinois Order takes it a step further than California by also authorizing the continued operation of cannabis production – in addition to cannabis distribution – under the “Essential Infrastructure” catch-all designated to ensure food production, distribution and sale.  Additionally, Illinois relaxed rules for cannabis sales by temporarily allowing curbside delivery.

More information on the Illinois Order is located here.

New York

On March 16, 2020, in advance of New York Governor Andrew Cuomo’s March 22ndNew York State on PAUSE” executive order (“New York Order”), state health regulators declared licensed medical cannabis[1] businesses to be “essential” services authorized to remain open in anticipation of the New York Order closing nonessential businesses.  In conjunction with its declaration, the New York Department of Health issued guidance, strengthening the safety and health protocols for state-registered medical cannabis businesses, which included:

  • Authorizing operators to dispense from the doors of their facilities, as long as exchanges are on camera and patient ID cards are validated.
  • Permitting operators to expand home delivery without prior approval until April 16 (for those already approved for home delivery).  The state recommends delivery drivers wear masks and gloves and use their own pens for signatures.
  • Encouraging businesses to have patients set up appointments in order to avoid overcrowding in dispensaries.

More information on the New York Order is located here.

As you are aware, things are changing quickly and there is no clear-cut authority or bright line rules.  This is not an unequivocal statement of the law, but instead represents our best interpretation of where things currently stand.  This article does not address the potential impacts of the numerous other local, state and federal orders that have been issued in response to the COVID-19 pandemic, including, without limitation, potential liability should an employee become ill, requirements regarding family leave, sick pay and other issues.

For more legal insights visit our Coronavirus (COVID-19) page.

*This alert is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. Please contact your Sheppard Mullin attorney contact for additional information.*

[1] Despite recent promises by Governor Cuomo, adult-use cannabis is illegal in the State of New York.