On May 18th, Massachusetts Governor Charlie Baker announced the Commonwealth’s four-phase roadmap (the “Plan”) to reopening business operations in the Commonwealth. Order Implementing a Phased Reopening of Workplaces and Imposing Workplace Safety Measures to Address COVID-19, a.k.a. Covid-19 Order No. 33 (the “Reopening Order”).
The Massachusetts Suffolk Superior Court, in a ruling by Justice Ken Salinger on April 16, 2020, denied the plaintiffs’ plea for an emergency preliminary injunction in their suit against Massachusetts Governor Charles Baker, which sought to have recreational marijuana establishments added to the list of “essential” businesses. In making its ruling, the Court came to the conclusion that the plaintiffs were not likely to succeed on the merits of their claims. Among other factors, this resulted in the Court’s decision to deny the plaintiffs’ motion that, if granted, would have permitted recreational marijuana establishments in the Commonwealth to re-open, after their effective closure by executive order of the Governor. The following summarizes a few of the ruling’s key elements.
Given the current disruptions caused by the COVID-19 global pandemic, an immediate challenge confronted by companies actively engaged in fundraising efforts is the adequacy of risk factor disclosures to prospective investors, especially in light of the impact of the current pandemic.
Massachusetts Governor Charles Baker, in a response to the suit that was brought against him last week in connection with his decision to designate recreational marijuana businesses as “non-essential,” filed an “Opposition to Plaintiffs’ Motion for Preliminary Injunction” on Monday, April 13, 2020. The filing seeks to rebut the plaintiffs’ claims by offering counterarguments to their pleading for relief from the Governor’s executive orders that effectively shut down the recreational cannabis industry in the Commonwealth. The main thrust of the Governor’s argument is that the plaintiffs have failed to show a likelihood of success on the merits of their claims and, therefore, should be denied the injunctive relief they so seek. Below are some of the key takeaways from the response.
In certain states (not currently including Massachusetts), cannabis-related businesses have been deemed “essential” businesses by local governments. In those states, medical and/or adult-use programs have continued to operate during the COVID-19 pandemic. Nevertheless, cannabis business operators have had to quickly adapt to the changing environment and implement new safety protocols, including limiting the number of patients and customers in retail shops at one time, and providing new online and telephone ordering channels for products that can now be delivered and/or picked up curbside. Changes to standard operating procedures bring new challenges to the industry, including how to accept payment for purchased products.
On Tuesday, April 7, 2020, five recreational (adult-use) marijuana companies and one individual, a veteran of the U.S. armed forces, filed suit against Massachusetts Governor Charles Baker, seeking declaratory and injunctive relief that would, if successful, nullify the Governor’s executive orders to classify recreational marijuana establishments as “non-essential”, which has forced them to close shop. On March 23, 2020, in light of the COVID-19 crisis, Governor Baker issued an executive order that all “non-essential” businesses close their physical (brick-and-mortar) facilities until April 7, 2020 (extended to May 4, 2020 by a subsequent executive order). While medical marijuana establishments were deemed “essential” and therefore able to remain open, recreational marijuana facilities were not. The following are some of the key takeaways from the complaint filed in connection with the suit and related issues impacting the recreational marijuana industry as a result of their forced cessation of operations.
On Friday, April 3rd, the Massachusetts Cannabis Control Commission (CCC) held an open public meeting (via webcast video, for obvious reasons), in which the Commissioners and Executive Director discussed the impacts of the novel coronavirus (COVID-19) on the Commonwealth’s marijuana industry. The main thrust of the meeting was aimed at addressing the effects of the recent decision made by Governor Baker to deem the recreational/adult-use portion of the industry as “non-essential,” and therefore, subject to closure during the state-wide period of emergency – a move that is unique to Massachusetts. Therefore, the recreational marijuana businesses in the state, while being unable to access any of the fiscal support offered by the recent federal CARES Act, are unable to sustain much needed cash flows at a critical time during this health and economic crisis. As a result of these issues, the CCC, during their meeting today, sought to explore possible avenues and develop strategies for remedial action.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was recently passed in response to the COVID-19 pandemic to provide much-needed economic relief to individuals and businesses. The Small Business Administration (SBA) is now offering the Paycheck Protection Program (PPP) and federal disaster loans for working capital via the Economic Injury Disaster Loan (EIDL) program to small businesses and non-profits to help small businesses in the U.S. stay afloat during this historic emergency. Although these programs are not available to state licensed cannabis related businesses, it is available for hemp producers and manufacturers. Here are 5 take-aways about the SBA’s EIDL and PPP programs:
The COVID-19 pandemic has created new challenges and – for a few – opportunities in the cannabis industry, which has been complicated recently by liquidity concerns. Further supporting the old adage that certain “sin” industries, like alcohol, prove resilient in recessionary times, Columbia Care announced that it had achieved record revenue the week ending March 14th and had broken weekly revenue records in facilities in eight of the states in which it operates (however, there are questions about whether consumers and patients were making major purchases, wary of potential closings). Here are five initial key takeaways that industry participants should keep in mind as they make decisions over the next few weeks: