The COVID-19 pandemic is intensifying the already-challenging issues facing the cannabis industry, experts say.

Having 33 states with legalized cannabis, including 11 for recreational use, “makes cannabis compliance very hard,” but add the pandemic and “you’ve got a very complex situation because it’s very fluid,” said Gary Kaminsky, director of legal compliance for New York-based Acreage Holdings Inc., which operates multistate cannabis operations. 

He was among speakers at a Business Insurance webinar on the state of the cannabis industry in the wake of COVID-19.

The pandemic is creating additional compliance and operational challenges, requiring adherence to different statutes the industry has not had to deal with before, including those of the Occupational Safety and Health Administration, health regulations, and the Americans with Disabilities Act, said Mr. Kaminsky.

It is okay to force employees to have their temperatures taken, and you can tell them their symptoms mean they should not come into work, but on the other hand “patients need to be taken care of,” he said. 

Most states require that masks need to be worn in the dispensary, there must be social distancing, and sanitizing, while many now offer only curbside service. Curbside service is a complication because different software is needed to do transactions, so the logistics of running a dispensary have become “much more complex,” he said.

But because cannabis is considered an essential business, compliance professionals have to create task forces internally and monitor the various developments going on, he said.

Wesley Hein, head of legal, compliance and government affairs for Mammoth, California-based Mammoth Distribution, said many times, people are trying a new product and the industry has focused on creating a retail experience that helps answer questions.

It is “hard to do that with curbside pickup,” and this magnifies the extent to which this is a regulated industry, he said. The cannabis industry is prohibited from doing much of the normal marketing other industries might do, so it has put much of its marketing in the dispensary, which is now unavailable.

He said also the supply chain, from seeds to manufacturing, all “have to be rejiggered” for social distancing, “and that’s been significant.”

Lindsay Robinson, executive director of the California Cannabis Industry Association in Sacramento, said those “who tend to be more on the prohibition side” of cannabis are now taking the opportunity to attack legal cannabis.

Mr. Kaminsky said that in Massachusetts the governor chose to say that medical, but not recreational, marijuana is an essential business, apparently out of concern that permitting recreational marijuana would bring people in from adjoining states.

This has resulted in certain users not being able to get marijuana as a medication, including veterans who do not want medical marijuana cards, an identifying card issued to qualifying patients, because they fear it could hurt their receiving Veterans Administration benefits if it is discovered they are using a substance illegal under federal law.

Mr. Hein said three of every four cannabis dollars are spent in the illicit market, and he is not sure how much this has been affected by the pandemic.

“Obviously the legal market’s issues have been compounded by the current pandemic that we’re facing, but most of them were pre-existing and will continue to exist afterward,” said Ms. Robinson. There are long-term changes that need to be made and “lots of battles” to be faced in California where only two-thirds of localities allow cannabis activity, she said.

Ms. Robinson said also a truncated state legislative session this year has reduced the number of cannabis-related bills from 50 to the “low 20s and I imagine that is going to continue to be cut back” with bills not moving forward unless they deal with the pandemic and other issues such as homelessness and wildfire prevention. “We’re seeing the landscape change beneath us,” she said. The truncated session provides less of an opportunity to have a platform to pitch reform.

Education was stressed by the speakers. Ms. Robinson said the public understands sensible regulation and most people want cannabis to be regulated, legalized and available. “We need to focus on education” for consumers and lawmakers and advocate for ourselves, she said.

“We’ve got to educate everybody more about this industry,” particularly regulators and legislators, because arbitrary, knee-jerk reactions cause us major concerns, said Mr. Kaminsky.

“You have to create a regulatory, enterprise risk management system” that takes into account the legal and regulatory aspects, but also incorporates elements including operations and finance, he said.

The session was moderated by Dean A. Rocco, a partner with Wilson Elser Moskowitz Edelman & Dicker LLP in Los Angeles, who is co-chair of the firm’s cannabis law practice.

More insurance and risk management news on the coronavirus crisis here.

Access the on-demand “State of the Cannabis Industry in the Wake of COVID-19” webinar here. 

Register for future webinars in the “Cannabis & Hemp Webinar Series” here.