25 Mar Corona-Cannabis Update #3: Pitching In, Layoffs Begin

We continue to cut through the blather and bring you just coronavirus-related updates concerning the cannabis industry. Now finally ensconced outside NYC, we will seek to provide these alerts and commentary as often as possible. Here’s today’s quick update:

• Pitching in. Dispensaries and producers in a number of states, including California and Massachusetts, are gearing up to produce and donate hand sanitizer for healthcare workers and hospitals. Apparently this is not inexpensive, but is also not a complicated process.
• Here come the layoffs. A major cannabis media company announced cutting nearly 100 jobs. They say it is related to coronavirus interfering with their ability to raise capital. This particular company was already facing difficulties, having completed an earlier round of layoffs before the crisis.
• SBA not to the rescue. While many states are deeming cannabis production and sale essential, the Small Business Administration confirmed on Monday that marijuana businesses remain ineligible for loans for small businesses related to the pandemic. However, in a tweet, the SBA’s Seattle district office said that businesses producing hemp and hemp-derived products, which are no longer deemed controlled substances, are eligible for loans.
• MA closes adult use stores. Massachusetts announced on Monday that its adult use stores have to close for two weeks. Other legal states like Nevada have moved to an all-delivery model, but Massachusetts has yet to approve delivery. Adult use stores co-located with medical cannabis stores in MA can stay open, as can standalone medical retailers.
• More states declare medical cannabis essential. States like Hawaii, Oregon, Oklahoma, Maine, Colorado and Washington (among others) have allowed medical cannabis to continue to be produced and sold. Some are limiting retail activity to delivery or curbside sales.

So we can add cannabis delivery services to the winners'(ish) list in this mess. There are some reports that adult use sales are dropping after an initial “stockpiling” when the crisis began. This sales decline might be temporary as the previous surge in sales is absorbed, but some believe sales will drop as people worry more about their finances and spending. Let us also say THANK YOU to those in the industry ready to spend limited resources to produce and donate hand sanitizer to protect health care workers.

One side note: public cannabis companies should note that the SEC has announced a 45-day extension in making any periodic filings if the delay is due to coronavirus (and you make an 8-K filing explaining why). Check with your securities counsel!