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April 3, 2020

COVID-19's Impact on Cannabis Businesses

In an effort to address the COVID-19 pandemic and slow exposure rates in New York State, Governor Andrew Cuomo issued Executive Order 202 on March 7, declaring a state of emergency until September 7. His supplemental Executive Order 202.6 was the first in a series of orders that progressively reduced in-person workforces for non-essential businesses, beginning at a 50-percent reduction and culminating in a 100-percent workforce reduction. Businesses deemed essential are exempt from the requirement.

As COVID-19 continues its rapid spread, mayors and governors across the country are mandating similar measures to protect residents from exposure. This includes directing certain non-essential businesses to completely close their physical locations while essential businesses are allowed to remain open as long as measures are implemented that ensure social distancing for employees and the public. 

While the designation between non-essential and essential may not currently be clear for cannabis businesses, including adult recreational and medical marijuana businesses, they’re still impacted by mandated in-person workforce reductions and shelter-in-place mandates. In New York State, registered organizations that cultivate and dispense medical marijuana have been deemed as an essential health care operation and are not subject to the mandatory in-person workforce reduction.

Likewise, California declared licensed cannabis businesses as essential and is allowing their continued operation under the shelter-in-place restrictions. In the San Francisco Bay Area, cannabis sales soared more than 150 percent over the same period a year earlier, and Ilera Healthcare in Pennsylvania had its biggest week ever.1  

In certain locations, cannabis businesses that were initially declared non-essential have now been designated as essential, and regulations, to some extent, have also been temporarily relaxed to accommodate the new normal for cannabis operations (e.g., delivery restrictions).

Business closure mandates are evolving rapidly as COVID-19 progresses. As these mandates continue to evolve, marijuana businesses may be uncertain regarding their status as non-essential or essential under local and state mandates as well as what regulations might be temporarily relaxed if they are able to remain operating. 

Unfortunately for marijuana businesses detrimentally impacted by COVID-19, the US Small Business Administration clarified that, under the Corona Virus Aid, Relief, and Economic Security Act (CARES) Act stimulus package, cannabis businesses aren’t entitled to receive a cut of the federal dollars being appropriated for disaster relief because of the Controlled Substances Act.2  However, businesses that produce or sell hemp and hemp-derived products—including cannabidiol oil (CBD)—may be eligible for relief under the CARES Act.

If you have any questions regarding the content of this alert, please contact Aleece Burgio, Cannabis Team Leader, at aburgio@barclaydamon.com or another member of the firm’s Cannabis Team.

We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. You can reach our COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.


[1]  “Is Marijuana an ‘Essential’ Like Milk or Bread? Some States Say Yes, Dan Levin, New York Times, March 25, 2020; https://www.nytimes.com/article/coronavirus-weed-marijuana.html

[2]https://www.sba.gov/sites/default/files/resource_files/SBA_Policy_Notice_500017057_Revised_Guidance_on_Credit_Elsewhere_and_Other_Provisions.pdf

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