COVID-19 Materially Impacts Cannabis Compliance

By Gary Kaminsky, Director of Legal Compliance, Acreage Holdings

“COVID-19” — words that are indelibly embedded in our lexicon and our lives. The impact of this pandemic has been catastrophic globally and continues to wreak havoc on all facets of society. COVID-19’s impact on the cannabis business has been profound. This has added to challenges the industry already faced as a federally illegal business that is permitted to operate under 33 different state regulatory schemes. As COVID-19 descended upon the U.S., cannabis operators were already reeling from a 2019 that saw decreased access to capital, legislative uncertainty and the illicit-market vaping crisis that struck the cannabis industry by association.

Maintaining a comprehensive cannabis compliance infrastructure was already a must for our complex industry. The perfect storm of 2019, compounded by the long-term impact on the way businesses will have to operate in a post-COVID-19 new world order, will heighten that need even further. Operators must learn to be flexible enough to adapt to evolving state orders and pronouncements mandating new specific standard operating procedures. Cannabis SOPs, already detailed pursuant to state requirements, now must be continuously amended to incorporate numerous additional dictates levied on the cannabis industry by governors and health departments in response to COVID-19.

The great irony is cannabis has been designated an essential business across the country, permitting companies to continue to operate during the crisis. Consumers have shown a prodigious desire for marijuana products, with dispensaries across the country seeing as many patients as ever, if not more. Nonetheless, to date the federal government has been unwilling to include the industry in relief plans, causing cannabis companies to scramble to find alternative means to survive so that their employees can heroically service the populace. Meanwhile, states continue to issue steady streams of orders mandating additional COVID-19-related procedures to meet unique employment- and health-related issues.

Cannabis compliance has always been a challenging exercise, requiring a holistic approach to creating a regulatory enterprise risk management system. For a multi-state operator, this system must take into account the disparate state and local laws and regulations, and it must be able to navigate federal illegality and accompanying constraints including banking and efficient tax planning.

Unlike in other industries, cannabis demands that compliance be enmeshed into a company’s operational infrastructure, as the regulatory scheme is focused on specific aspects of the business. State and local regulations tend to mandate certain policies and procedures and overall control measures. State oversight can be quite micro in practice, as many regulators take a hands-on approach. As a result, successful cannabis companies must develop detailed SOPs to address operational workflow. The role of compliance is to provide the backbone infrastructure, taking into account regulatory requirements and providing checks and balances to facilitate lawful moneymaking.

COVID-19 has placed numerous additional challenges to cannabis compliance, requiring novel policy and procedure amendments to SOPs. Companies must now not only ensure adherence to legislated regulatory dictates but comply with the steady stream of new COVID-19-related directives, many of which are being created anew and on the fly by regulators attempting to keep up with the pandemic as it expands across the country. In addition, companies are required to incorporate unique employment and health issues into their compliance programs, taking into account pronouncements from the Centers for Disease Control and Prevention as well as Occupational Safety and Health Administration, Americans With Disabilities Act and other employment-related obligations.

The first step to addressing COVID-19 is to assemble a multidisciplinary internal task force composed of members of key departments, including legal/compliance, medical, communications, operations, finance and technology. At Acreage, a cross-functional team was quickly assembled to serve as the primary source for all internal communications and directives and the driver of all initiatives. As essential businesses, cannabis companies need to ensure they are able to remain open and safely serve the public while complying with relevant governmental and health-related directives. This requires a concerted effort of allocated internal resources flexible enough to adapt to the fluidity of the COVID-19 pandemic.

Protecting employees and fielding a healthy team is the most important consideration for cannabis companies. Appreciating the sacrifice of front-line workers and making their environment as safe as possible is crucial. Companies must establish appropriate internal procedures for minimizing contagion risks. This starts with identifying symptomatic employees. This can take the form of routine temperature checks as well as establishing a system for self-reporting of health-related symptoms. Employees should be required to wash their hands regularly throughout the day, particularly after handling products and engaging in patient interaction. Companies also need to ensure they maintain a sufficient supply of sanitizing products for all personnel and patients.

State mandates have made masks mandatory for all employees and patients, where dispensaries are permitted to remain open to walk-ins. Appropriate social distancing procedures need to be instituted in each facility, including limiting the number of patients at any one time and creating an orderly waiting line with adequate distance between each patient. A safe distance between point-of-sale (POS) stations and consumers should be created, possibly marked with yellow tape. Plastic shields (sneeze guards) are recommended at each POS if consumers are permitted to approach.

Curbside POS is highly recommended at this time to minimize the risk of exposure. Employees engaging in curbside sales should wear masks and gloves at all times. A software solution/app to effectuate sales is preferable to cash exchanges. Enhanced security outside the dispensary is required as employees will be carrying product and, in some cases, cash throughout the day.

The fatal COVID-19 pandemic has spread throughout the world without a clear end in sight. The tragedies and complications it leaves in its wake will continue to challenge us all. The cannabis industry, as one of the few essential businesses, must prepare to meet this challenge. Cannabis companies need to keep a close eye on COVID-19 and its progression, as well as the government response and effort to minimize the impact and spread. To this end, thoughtful preparation, analysis and enhancement of already detailed compliance SOPs is required.