UXBRIDGE – On a busy day, Caroline Frankel can see 500 to 700 people come through the door of her adult-use cannabis business.
But Tuesday, Caroline’s Cannabis closed, deemed a non-essential business by Gov. Charlie Baker’s administration in efforts to contain the spread of the coronavirus. And Frankel is one of several people interviewed who is bracing for uncertainty in an already uncertain industry.
“Look at how new and fragile this industry is,” Frankel, a social equity program participant, said in an interview Friday. She reported she had laid off one of her 10 staff members and the rest of the staff is on a leave of absence. “We work so devastatingly hard to be a part of it, to see the whole industry cease like this, I think we’re going to see some very serious financial effects trickle down from this.”
It’s not just the little guy.
“I got into this to provide cannabis safely and legally, and right now I am very limited in my ability to do that, and it is very upsetting and frustrating,” said Dr. Karen Munkacy, founder and CEO of Garden Remedies, which has three adult-use and medical cannabis locations in addition to a headquarters and a production facility. Medical cannabis is deemed an essential business, so Garden Remedies remains open, although a spokesperson said medical sales account for only 15% of revenue. “I have 150 jobs at risk because of what the governor has done, and we’re hoping that upon further evaluation he will do the right thing.”
Indeed, the industry is coming together in hopes that Baker will reverse his decision.
“We are disappointed and dismayed by your classification of adult-use cannabis businesses as nonessential during this COVID-19 crisis,” David O’Brien, president and CEO of the Massachusetts Cannabis Business Association wrote in a letter Friday. The MassCBA is conducting a survey of cannabis businesses to determine the impact of the classification. “We are asking you to reverse this decision immediately and classify all cannabis businesses as essential services.”
Asked why recreational stores were not deemed essential, the governor’s office responded with Baker’s statement from a press conference March 23.
“Medical marijuana dispensaries are open; they’re treated for all intents and purposes the same way that we treat health care operations for purposes of this,” Baker said. “Recreational dispensaries are not. And the main reason for that is because Massachusetts is one of the few states in a big geographical area that has available recreational marijuana and a ton of traffic associated with that coming from other states, we felt that in particular would need to be closed and would not be considered essential as part of this order.”
O’Brien and cannabis advocates gave several reasons, however, why they believe Baker should classify adult-use marijuana as an essential business.
First they cited precedent.
“The vast majority of states where adult-use cannabis is legal and that also have stay-at-home orders by governors are including adult use cannabis businesses in the essential category,” O’Brien said, citing California, Illinois, Michigan and Oregon as examples.
Advocates also noted that liquor stores were deemed essential businesses.
“The hypocrisy is very upsetting,” Munkacy said.
“Question 4 (to legalize marijuana) was put together to kind of follow the liquor industry,” Frankel said. “I think it’s crazy that the liquor industry can be open and we cannot.”
Advocates also stressed health concerns.
Several advocates spoke of customers who use marijuana to treat health conditions and as a substitute for alcohol and other drugs.
But Munkacy said that many of her customers don’t want to get a medical marijuana card because it requires registering with the state.
“A lot of the people that have come to us have used cannabis instead of alcohol and narcotics,” Munkacy said. “They substitute with a much safer substance. But a lot of those people can’t be registered as patients because if their employer found out they would be fired.”
Furthermore, many people who use marijuana for health reasons may no longer carry medical cards in states where adult use is now legal.
“In every state where you go from a medical use only to a recreational adult use, the number of medical patients decreases,” said Jonathan Sandelman, CEO of Ayr Strategies Inc. The company operates two Sira Naturals medical dispensaries in Massachusetts and a cultivation and production facility that serves medical and recreational marijuana customers.
“Now people are forced, during a very tough economic time, to not have access … I don’t know anyone who doesn’t feel more anxiety than they did two weeks ago.”
Similarly, veterans who use marijuana to treat ailments cannot get a medical marijuana prescription through the Veterans Administration because cannabis remains illegal federally, Munkacy said.
And advocates said their product is also a lot safer than the product on the black market, where cannabis users are turning in the absence of adult-use stores.
“What it’s doing is taking people’s ability to buy safe and legal product and now they’re going back to the black market,” Munkacy continued. “It’s ridiculous that people have to buy their medicine in a zip-lock bag in a parking lot. It’s risking the health of our citizens in Massachusetts.”
O’Brien cited the ban on vaping products as an example of what happens when legal product is restricted.
“One of the unintended consequences of vape prohibitions was it drove people to the illicit market,” O’Brien said. “If we’re driving people to the illicit market now, where coronavirus is a respiratory disease, that’s bad policy.”
Finally, O’Brien and other advocates noted that the nascent adult-use industry – although it rang up $420 million in sales in 2019 – often has trouble attracting capital that could sustain them through a downturn. Few banks will serve marijuana businesses, a rigorous and lengthy application period requires businesses to expend significant costs before they can begin to sell product, and funds from the $2 trillion bailout cannot be used by cannabis businesses because the drug remains federally illegal.
“Businesses will have layoffs and will not be able to pay rent and lease payments, not to mention there will be a loss of revenue for the state and communities,” O’Brien said in an interview. “I worry that the social equity and economic empowerment applicants that are seeking capital now will find it even harder to find people — which is already difficult — to invest.”
Munkacy estimated that about 4,000 people, or roughly half of the industry’s workforce, will be laid off if adult-use is not reinstated.
Nevertheless, back at Caroline’s, Frankel said she was optimistic. ”You have to be, in this industry,” she said.
“I know Gov. Baker has his hands full. His primary focus is about saving lives here in Massachusetts. I totally understand that,” Frankel continued. “I think everybody is working with the governor to see if we can reopen and adopt precautionary measures in the best interest of the customer and the community as a whole.”