How Each Coast Is Treating the Cannabis Industry During the COVID-19 Outbreak

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.