The New Jersey Department of Health announced March 23 that it would allow the state’s medical cannabis dispensaries—called Alternative Treatment Centers—to provide curbside service to patients amid coronavirus concerns, according to The Philadelphia Inquirer.
Prior to the announcement, all transactions had to take place inside the state’s dispensaries, the news outlet reported.
With the new guidance, New Jersey joins other states, such as Illinois and Pennsylvania, that have also relaxed regulations to allow both dispensary employees and customers to maintain social distancing.
To begin curbside sales, New Jersey’s dispensaries must submit a plan outlining their procedures to the Department of Health, The Philadelphia Inquirer reported, and must also notify their local municipal governments and police departments.
The New Jersey Department of Health has relaxed its medical cannabis rules in other areas, as well, to ensure patient access during the COVID-19 outbreak. All caregiver registration fees have been reduced from $100 to $20, according to The Philadelphia Inquirer, and the Department of Health has eliminated its requirement that dispensaries conduct in-person consultations for new patients, allowing the consultations to be completed over the phone.
Oregrown launched in 2015 with the opening of its first dispensary in Bend, Ore.
Photo courtesy of Oregrown
Oregrown Looks Toward Further Expansion After Opening Third Dispensary Location
Co-Founder and Chief Brand Officer Chrissy Hadar shares insight into the company’s plans for each new store, as well as its approach to community engagement, branding, team building and more.
Oregrown, a family-owned company that has operated a cannabis dispensary in Bend, Ore., for over five years, is rapidly expanding with plans to have four total retail locations under its umbrella by the end of the year.
Chrissy Hadar, Oregrown’s co-founder and Chief Brand Officer, tells Cannabis Dispensary that the company will be the first to have a dispensary in all four major areas of the state: Central Oregon, Portland, Eugene and the coast.
Oregrown opened its second retail location in Portland in December 2019, and earlier this month, it celebrated the grand opening of its third store in Cannon Beach, which Hadar says is one of the most well-known tourist towns on Oregon’s coast. The company plans to open a fourth location in Eugene later this year.
Each market is exciting for Hadar for different reasons, she says.
“I was born and raised in Portland, so after the success of the Bend store over the years, it was definitely on my radar from the beginning to have a store in my hometown,” she says. “It was really about finding the right location. We didn’t want to just throw up a store at the first space that became available, so we were really picky and we took our time.”
Photos courtesy of Oregrown
Oregrown's second dispensary location in Portland opened in December 2019.
Oregrown’s Portland location is along public transportation lines, Hadar says, and is in the middle of a burgeoning area where new housing and office buildings are being constructed.
The Cannon Beach store is also located along the town’s main strip, Hadar says, and is easily accessible for the area’s tourists.
“Cannon Beach is definitely in line with the Oregrown brand in that it’s a high-end town, so there’s lots of great food [and] beautiful art,” she says. “While it is extremely seasonal, we feel that it’s going to be really attractive to the tourists of Cannon Beach during the tourist months.”
The Eugene location, which will open later this year, is in the heart of a college town, which also resonates with the Oregrown brand, Hadar says.
Resonating with the Local Community
Hadar attributes much of Oregrown’s success in Bend to the company’s community involvement there. Cannabis was still largely taboo when the company launched in 2015, and Hadar had issues finding someone to lease her a building, as well as finding architects to work on renovations.
“Obviously, things have changed, but we still go into each community and do as much outreach as possible,” she says. “We’re finding new ways to approach the communities that we enter. … It’s not coming in and just being a brand. It’s about really introducing yourself to the community as a brand that wants to be there to help the community, not just there to make money.”
Oregrown has partnered with organizations like the Humane Society of Central Oregon in Bend and is in the process of setting up local beach clean-ups in Cannon Beach. In Portland, the company will explore ways to sponsor local events.
“It’s all about recognizing what is important in that community and what really resonates with people in that community, and then figuring out a creative way to insert yourself in those initiatives.”
Bringing the Outdoors Inside
Hadar and her team put a lot of thought into maintaining one consistent brand throughout Oregrown’s multiple retail outlets as the company started to expand, she says. Each store is a reflection of local culture, but a focus on the outdoors ties each location to the broader brand.
“Naturally, the Bend store is a reflection of the Bend culture, which is really driven by outdoor activities, be it in the summer or the winter with snowboarding,” Hadar says. “Portland is really driven by art and food, and … for the Portland store, we certainly had a larger budget. With that, our intent was really to … convey Oregrown as it is, but in a more mature way. I think the best way to say it is we just took it up a notch.”
For the Portland location, the Oregrown team placed a focus on bringing the outdoors inside through its branding.
“The ground mimics the earth, and then we have these couches that flow up from the ground and are the same color, and everything feels light and floating,” Hadar says.
The Cannon Beach store has more of a coastal feel, she adds, to connect it to the local culture there.
Oregrown's third dispensary location in Cannon Beach is easily accessible for the area's tourists.
Right now, Oregrown carries the same product lines in each of its three operational stores, but this could change over time, Hadar says, as the company collects sales data at its newest locations.
“We still don’t have as much data as I would like to make my specific buying decisions,” she says. “I think we need a couple more months under our belt. I think each market will necessitate its own buying patterns. You look at something like Cannon Beach, where it’s a sleepy coastal town 10 months out of the year, and then you’ve got this boom of tourists. Handling that and navigating those waters … will be interesting, to say the least.”
A Team That’s Part of Something Bigger
When hiring for new stores, Hadar starts from the top.
“I strongly believe it is not my job to build somebody else’s team,” she says. “It’s my job to find the best leader who shares the same values and practices that the Oregrown brand maintains. We start with a manager, and there’s a GM in between myself and the manager of each store that goes out and hires for each location.”
With each store opening, Oregrown has received many applications for its open budtending positions, Hadar says. The team sifts through the applications and conducts two rounds of interviewing to select the most qualified candidates.
“We don’t have a lot of turnover on the retail side, and I think that’s due to the company culture that we try our hardest to maintain across the board,” Hadar says. “With that comes an open-door policy, so anybody from any store can reach out to me at any time via Basecamp, … [an] intercompany communication system where you can have conversations and groups and chats so everyone can stay connected. With that connected feeling, people feel part of something bigger. Even if you’re at the Cannon Beach store and it’s a slow, rainy day, you still feel part of a bigger movement.”
Prior to opening the Portland store, the Oregrown team worked to improve its onboarding process, Hadar says. It uses software called Greenhouse to allow new employees to do all of their onboarding online, and much of the new hire training is also done online through the platform.
“We have the ability to do training videos and file all of their paperwork, and that has really helped streamline the process,” Hadar says. “Before, it looked like somebody was doing their taxes from the past 10 years. There was paper everywhere, and I was like, there has to be a better way to do this.”
Oregrown's Bend location is a reflection of the local culture, which is driven by outdoor activities.
Hadar participates in the day-to-day operations of the company as much as possible to maintain open lines of communication with Oregrown’s employees.
“I was in Cannon Beach last week for the opening,” she says. “I’ve been to Portland several times since it opened. Everybody knows me. I think that is also very important, as well, to not just open a store, have this brand [and] expect people to buy into it without you being there. It’s also you doing the work that you would expect others to do, like mopping the floors if they need to be mopped, and not just being this face that no one ever sees.”
Looking ahead, Oregrown will continue to look for opportunities to open additional stores in new locations.
“We’re just going to continue to look for opportunities to further our retail footprint,” Hadar says. “The goal is just to continue on the path we’re on now, as it’s working for us, and just explore every opportunity that comes our way."
Courtesy of Mana Supply Co.
Mana Supply Co. Opens Drive-Thru in Response to Accelerated Demand and COVID-19 Pressures
With help from the state, the company expedited its drive-thru plans to assist patients in need during the coronavirus outbreak.
All weekend and all day Monday, the team at Mana Supply Co.’s Edgewater, Md., location was moving patients and their vehicles through the new drive-thru lanes—keeping the traffic flow even and safe off State Rt. 2 and keeping new social distancing measures in mind every step of the way. The drive-thru opened on Friday, just in the nick of time.
Co-owner Christopher Jensen says business has increased about 30% in the midst of the coronavirus outbreak and the vigorous spike in demand for cannabis products. The sudden move into crisis mode across the globe has put businesses like Mana Supply Co. on the lookout for new efficiencies, new ways of engaging their patient base and ensuring everyone has access to products they need.
Courtesy of Mana Supply Co.
Last week, the state of Maryland issued its “social distancing” measures, which greenlit curbside pickups for medical cannabis dispensaries. It was an immediate help, but Jensen and Volz still had reservations about sending employees to cars for cash exchanges. The drive-thru cuts down on some of that up-close interaction. And it is part of a plan that’s been in the works at Many Supply Co. for a lot longer than just the past few days and weeks. Jensen credits the state’s diligent response to the many nuanced business concerns for getting the drive-thru lanes open in a time of great uncertainty.
“This has been changing almost on an hour-by-hour basis,” Jensen says. Monday morning, Maryland Gov. Larry Hogan issued an order on further business closings. The Mana Supply Co. team worked with the state’s Office of Legal Counsel to ensure that medical cannabis businesses would remain “essential” and able to keep the doors open during this crisis—and they are.
Co-owner Matt Volz was in the parking lot this morning, directing traffic and helping answer patients’ questions. The company’s drive-thru service is working on a pre-order basis now, mimicking the CVS prescription pick-up window next door.
When patients pull into the Mana Supply Co. parking lot, they stop at a check-in point, much like reception desks in the in-store environment. “It takes, from start to finish, all of about 90 seconds,” Volz says.
The drive-thru plan came together five years ago, when the team scouted a former bank location in Edgewater. The two ATM lanes had serious potential for drive-thru services in the future, something that would require assistance from the state as its medical cannabis program evolved.
As the coronavirus crisis rapidly expanded, the Mana Supply Co. team worked closely with county and state regulators to get the necessary safety and check-in compliance measures in place to open a drive-thru service. One lane is open now, with high-speed garage doors opening and closing to provide patients an added layer of privacy and security while completing their transaction.
“I’m really proud of the state of Maryland,” Jensen says. “Gov. Hogan has been very forward-thinking. Our county executive in the county where we’ve got that drive-thru, Steuart Pittman, has been fantastic. The executive director of the Maryland Medical Cannabis Commission, Will Tilburg, is exceptionally forward-thinking.”
How COVID-19 Is Impacting Public Cannabis Companies
New Cannabis Ventures’ Alan Brochstein offers a breakdown of near-term impacts and opportunities, as well as a longer-term industry analysis.
The unprecedented novel coronavirus pandemic has turned life as we know it upside down, helping some industries, like grocery stores, and threatening the existence of others, like cruise ship and hotel operators. Where does cannabis fit in, and how does COVID-19 impact the many publicly traded companies in the sector?
Near-Term Operational Impact
Like all other businesses, the cannabis industry is having to quickly adjust. The good news is that no states, so far, have shut down cannabis operators, as they have been deemed as essential service providers, like drug stores.
We recently interviewed Kim Rivers, CEO of Trulieve, the dominant medical cannabis company in Florida with 45 dispensaries. She detailed the steps that the company has taken to keep customers and employees safe, including scanning temperatures of employees when they arrive and immediately sending workers home if they aren’t feeling well. The company has also offered free delivery to patients who are 65 or older and is piloting a mobile drive-up program for all patients.
A few public companies have commented on their operations, including Cresco Labs, which issued a press release describing its response, including heightened sanitation measures and an effort to drive traffic to online ordering. Green Thumb Industries, which, like Cresco, is headquartered in Illinois, issued a statement that it will prioritize medical cannabis patient access. Curaleaf informed its customers that it would devote the first hour of each day to customers 60 and older, and it also began offering a new service called WaitlistMe so that customers could wait in their car rather than in dispensaries or in line outside.
Planet 13 Holdings, which operates a superstore in Las Vegas that caters primarily to tourists, had said on Thursday that it would provide online ordering and delivery in addition to core dispensary services while closing its restaurant and secondary activities. On Friday, however, Nevada ordered all cannabis stores to close, while permitting delivery.
From the demand side, cannabis purchases have surged. Cannabis software company Akerna reported that legal cannabis sales rose 19.2% across its point-of-sale (POS) customers on March 18 compared to a week earlier, as patients stock up ahead of potential disruptions in their ability to buy.
Additional data from the state of Florida, which is dominated by publicly traded companies, showed that medical cannabis sales by volume soared in the week ending March 19. The state’s 234 dispensaries saw the following increases compared to the prior week:
Medical Cannabis (by milligrams of THC): +39%
Low-THC Cannabis (by milligrams of CBD): +23%
Cannabis Flower (oz.): +38%
Public companies with 10 or more dispensaries in the state include Trulieve (45), Curaleaf (28), Liberty Health Sciences (23), Cansortium (19), iAnthus (14), MedMen (10) and Columbia Care (10).
The CBD space is likely to be impacted as well. CV Sciences shared revenue guidance for Q1 that was substantially lower than Q4 levels, citing the pandemic as a significant factor. Green Growth Brands, which operates CBD stores and kiosks in malls across the country, closed all its stores and also suspended online sales, presumably due to financial distress.
Longer-Term Impact
Looking out, the pandemic threatens the very survival of some operators, but it also creates tremendous opportunities for those with the financial strength to endure the near-term challenges.
While operators may continue to see elevated sales as their existing and potentially new customers cope with unprecedented anxiety and sleep issues during the pandemic, the crisis could not have come at a worse time for the industry. For publicly traded cannabis companies, a constriction of capital available that escalated during the vape crisis in the fall has now made an extremely challenging situation dire for many. Quite simply, many publicly traded cannabis operators are running out of cash and are likely unable to reduce costs quickly enough.
In response to the worsening economic environment, Tilray, which operates in Canada, sold $90.4 million of its stock with warrants at $5.95 at a price of $4.76 on March 13. To put that in perspective, the price was 67% below where the stock had closed at the end of February. Similarly, Harvest Health & Recreation sold $56 million of its stock on March 11 at effectively $1.41, 39% below where it had closed at the end of February. I believe that these desperate capital raises are a harbinger of more to come.
A major positive for the sector, in my view, is that, so far, states are unanimously declaring cannabis to be “essential.” This bodes well for the future, as it reinforces the thesis of the proliferation of adoption of legal cannabis by states. The economic devastation of the pandemic will likely spur states as well as they seek to grow tax revenue and expand employment.
The better capitalized companies with stronger profitability are likely to benefit over time as they face less competition. We could also see some private multi-state cannabis operators seek to acquire depressed single-state operators as a way to go public.
Impact on Stock Prices
While the impact on businesses is mixed, with some positive near-term demand but likely some additional expenses, and the longer term outlook most likely favorable for those that are able to weather the storm, it seems as if investors have sold all stocks in the sector without regard for how it might impact companies differently. The New Cannabis Ventures Global Cannabis Stock Index, despite a big bounce late in the week, has dropped 38.3% in the first three weeks of March.
Most of the American cannabis operators have still not reported financials for Q4, which are due by the end of April. This week, both Curaleaf and Green Thumb Industries will be reporting financials for Q4 and hosting calls, and perhaps investors will get a better sense of how the pandemic will impact the companies from the demand perspective as well as the additional operational costs. Additionally, investors will want to better understand the ability of the companies to boost supply should demand remain elevated. In May, companies will give investors a better picture of how the crisis is impacting them financially when they report Q1 financials.
Bottom Line
COVID-19 has a mixed impact in the short-term on the entire industry, with a surge in demand but likely a spike in the cost of doing business. Longer-term, the pandemic is likely to dramatically alter the landscape of the industry, which looks poised to benefit as a whole. Public companies with inadequate cash or too much debt and that aren’t profitable will struggle to raise capital, while the stronger companies will likely gain share.
Alan Brochstein, CFA is founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Brochstein continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances.
How Each Coast Is Treating the Cannabis Industry During the COVID-19 Outbreak
A look at the California and New York approaches to cannabis businesses during a global pandemic.
Across the country, state legislature and gubernatorial offices are taking a hard look at their state workforces, productivity measures, and the rapidly climbing statistics associated with the COVID-19 outbreak. Naturally, each respective state has different needs and protocols depending on its population distribution, prevalence of travel/interaction, and its infrastructure. However, certain tenets remain constant; critical infrastructure sectors must be preserved to permit citizens to retain a semblance of normal life during periods of quarantine.
This begs the question, does the cannabis industry qualify as a critical component of a permissive state’s infrastructure? Here, we take a look at an East vs. West approach to maintaining the established Cannabis ecosystems in coastal states California and New York.
California Progression
On March 4, 2020, California Governor Gavin Newsom proclaimed a State of Emergency in California as a result of the threat of COVID-19. As of March 19, 2020 the Executive department of the State of California issued Executive Order N-33-20 (hereafter, “CEO”) based on the rapid spread of COVID-19 throughout California. Under Government Code Section 8567, 8627, and 8665, it was Ordered:
…all individuals living in the State of California [are] to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors… In addition, and in consultation with the Director of the Governor’s Office of Emergency Services, I may designate additional sectors as critical in order to protect the health and well-being of all Californians.
A simultaneous memo was issued by the Cybersecurity and Infrastructure Security Agency (“CISA”) to define 16 separate categories that were considered critical infrastructure sectors essential to maintain continuity of society:
(1) Chemical;
(2) Commercial Facilities;
(3) Communications;
(4) Critical Manufacturing;
(5) Dams;
(6) Defense Industrial Base;
(7) Emergency Services;
(8) Energy;
(9) Financial;
(10) Food and Agriculture;
(11) Government Facilities;
(12) Healthcare and Public Health;
(13) Information Technology;
(14) Nuclear Reactors, Materials and Waste;
(15) Transportation Systems; and
(16) Water.
Naturally, CISA is a standalone United States Federal Agency under the purview of the Department of Homeland Security oversight—one would assume that these are federal critical infrastructures. Despite having healthcare and public health, as well as food and agriculture as two of the 16 categories, the cannabis industry is suspiciously absent.
It appears for now that California has left it to local legislature to address the issue. The Counties of Santa Cruz, Monterey, Contra Costa, Los Angeles, and San Francisco have all explicitly stated that cannabis dispensaries can continue to operate under the premise that they were a vital service provider akin to pharmacies and grocery stores. However, there is a premium and directive placed on restricting person-to-person contact as much as possible. This may change with the most recent CEO.
An important distinction here is that California has both recreational permissive use, and medical use for patients with significant cross-over in both products and dispensaries. Often one location will sell to both consumers and patients alike. With a full lockdown limited to essential needs, recreational consumers may face scrutiny.
New York Progression
Although under a slightly different guise, New York also has enacted similar precautions in limiting social interaction and restricting its residents in their work capacities. Governor Andrew Cuomo announced on Friday March 20, 2020, that he will issue a further modifying Executive Order directing all non-essential business in New York State to keep their workers home starting Sunday evening. This will replace and modify Cuomo’s prior Executive Order titled Executive Order 202.7 which required, among other things:
Effective March 21, 2020 at 8 p.m. and until further notice all businesses and not-for-profit entities in the state shall utilize, to the maximum extent possible, any telecommuting or work from home procedures that they can safely utilize. Each employer shall reduce the in-person workforce at any work locations by 75% no later than March 21, at 8 p.m.. Any essential business or entity providing essential services or functions shall not be subject to the in-person restrictions.
While we see the same “essential services” language in the recent Executive Orders signed by Governor Cuomo, New York has taken an extra step toward protecting the budding medical marijuana industry and its recipient patients. Specifically, the New York State Department of Health (“DOH”), endorsed by Governor Cuomo, Commissioner Howard Zucker, M.D., J.D., and Executive Deputy Commissioner Sally Dreslin, M.S., R.N., issued a two page document (last updated on March 17, 2020) labeled “Novel Coronavirus (COVID-19) Guidance for Registered Organizations”. The Department stated that it, “recognizes that registered patients may have severe debilitating or life-threatening conditions and are often immunocompromised.” The DOH further elaborated to include that Registered Organizations under the New York State Medical Marijuana Program are considered essential businesses. Registered Organizations are permitted to dispense medical marijuana from the doors of the dispensing facilities provided that the organization maintains compliance with all current laws, rules and regulations, including but not limited to dispensing on camera and checking the Primary Medical Provider and ID cards.
The New York State Department of Health went one step further by clarifying that until April 16, 2020, registered organizations who have been approved to deliver medical marijuana products to the homes of registered patients and designated caregivers may expand delivery services statewide without seeking the Department’s prior written approval. They further directed registered organizations to encourage patients to utilize this expanded delivery service whenever possible. It appears that despite a typically more restrictive marijuana program, New York has encompassed the entirety of its medical program enterprise as an essential service.
What This All Means
New York State takes a surprising approach and response to protecting both patient and registered organization rights with their Department of Health guidance, but there are two additional considerations at play.
First and most obvious, New York does not have a recreational statute which limits legal marijuana consumers to medically recommended patients registered with the State. Accordingly, any legal dispensation of marijuana is presumed to be a medical necessity per the recommendation of a Primary Medical Provider. By virtue of this alone, qualifying registered organizations as an essential business may place it within the scope of a medical or pseudo-pharmaceutical service under New York State law. Although California has been historically more progressive with reform, the Governor may remain silent on the issue due to this dichotomy of permissive use.
A second consideration deals with the direct language of the Executive Orders issued by each governor. California’s edict sets forth that residents are ordered to remain home for all non-essential functions that are not in furtherance of federal infrastructure. On the other hand, New York edict sets forth that residents and businesses are constrained to telecommuting and work-from home measures except essential businesses or services. We submit that this conspicuous absence of “federal infrastructure” permits the Governor to designate the Empire State Development Corporation as the appropriate entity to determine essential business under Executive Order 202.6 without violating federal law. On the other hand, should Governor Newsome issue a clarification with respect to the cannabis industry, it could potentially run afoul of the “federal infrastructure” as marijuana remains a federally scheduled drug under the Controlled Substances Act. It logically follows then, that permissive consideration of essential business should be regulated county by county.
Under this presumption, there is a conflict between local and state laws in California with respect to these Executive Orders which could invoke preemption should it be deemed that the local laws threaten the public safety. While local legislature is certainly competent and capable of judging the needs of its residents and determining whether to permit local cannabis businesses to operate, owners and operators of such businesses should still seek legal consultation as State law will likely prevail, especially during the current state of emergency.
About the author:
Anthony
De Ingeniis Esq., is a New York-based attorney with the law firm GoldbergSegalla LLP, elected in 2018 to be the youngest member of the firm's
Cannabis and Hemp Law Leadership Committee. He focuses his practice on cannabis
law issues emerging in the market and has a passion for the science behind the plant
stemming from a biomedical background and Bachelors of Science from SUNY Stony
Brook University. Anthony also acquired a Master of Arts in Education from
Stony Brook University and enjoys teaching at any level, from adolescent to
adult. Anthony also practices with Goldberg Segalla's Intellectual Property and
General Liability litigation teams and applies his experience in these
disciplines to his representation of clients in the cannabis and hemp
industries.
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