california cannabis businesses

Over the weekend the Governor’s office answered the burning question of whether or not California cannabis businesses will be allowed to remain open during the statewide shelter in place. Cannabis businesses are considered an “essential function” under the healthcare and public Health sector. Therefore, under the state order, all cannabis businesses are considered essential and may remain open as long as they practice social distancing and engage in additional health and safety cleaning precautions. A few things to keep in mind:

California Cannabis Businesses – Local Order

The state order allows local jurisdictions to initiate more restrictive orders as long as they are consistent with the state order. Thus, local governments may place limits on the cannabis businesses but cannot prevent them from operating at all. Some jurisdictions are limiting operators to an m-license designation only. It’s important to check the order from your local jurisdiction, if any. On the positive side, many jurisdictions are allowing curbside pick-up or other accommodating procedures. If your business is initiating any changes and/or accommodations during this time, its recommended that you contact both the local and state regulatory agencies and request written permission for your activities. Contact us if you need assistance with obtaining a written approval.

Employment matters

For operators of California cannabis businesses, it’s important that you understand your employer obligations. During this unprecedented time your business may experience layoffs or staff shortages. It’s essential to remain informed on recent legislation enactments such as the Families First Coronavirus Response Act, which was signed into law on March 18, 2020. Our office is open to assist with any questions or concerns.

Taxes

Make sure to connect with your tax professional if you have questions about deadlines, disaster relief, etc. The federal income tax deadline of April 15 has been pushed to July 15, 2020. The State of California has not announced any similar change to the tax filing deadline but has expressed its intent to provide assistance to businesses including California cannabis businesses during this time such as granting extensions, and relief from penalties and interest.

Contracts

Even if your business is allowed to stay open, along with other cannabis businesses, please be aware that other supplies, manufactures, and partners may not be. There may also be delays or shortages preventing contracts from being honored. Make sure to review your contracts for any “force Majeure” clause or similar which should detail what happens during these situations. Contact our office for assistance in interpreting your contracts and strategizing to minimize liability.

Pending Applications

For anyone that has an application pending with a regulatory agency, expect delays. Each agency is trying to figure out how to function moving forward. Every jurisdiction is different. Please reach out to our office for assistance in working with the local and state agencies.

Pending Renewals, Payments and Deadlines

State license renewals, payment deadlines, Metrc and regulatory compliance should proceed and adhere to established deadlines as usual.  However, some jurisdictions are providing some relied. For example, local permit renewals in Mendocino County have been granted extensions in accordance with their shelter in place order and emergency declaration.  More information on deadlines and extensions will be forthcoming in the days and weeks ahead.  Please reach out to us if you have questions.

Disaster Relief

Each of California’s Cannabis Licensing Agencies provides a mechanism for Disaster Relief.  A variety of events and circumstances qualify under the regulations including an epidemic such

as the COVID-19 virus. The regulations are similar among the three licensing agencies, with each of them calling for the licensee to notify the responsible agency of their inability to comply with the regulations and request relief from the specific requirement that cannot be met.  Disaster relief regulations can be found in the following sections of each set of regulations respectively:

Bureau of Cannabis Control – § 5038. Disaster Relief.

California Department of Food and Agriculture – CalCannabis – § 8207. Disaster Relief.

California Department of Public Health – Manufactured Cannabis Safety Branch – §40182.  Disaster Relief.

Commercial Cannabis Insurance

Unprecedented times like these have us all thinking about the security of our businesses. While insurance Coverage is often overlooked, or may have been placed “low on the list of priorities” during this unprecedented period of development in the industry, commercial insurance for California cannabis businesses is available from a variety of insurers with annual premiums as low as $750 per year for discrete coverage types.  Insurance coverage can help to mitigate unforeseen losses and unexpected events such as the natural disasters that have impacted Northern California over the last several years.  Insurance options can include: General Liability; “All Risk” for the project property; Workers Compensation, Live Plant Coverage; Products and Completed Operations; Property-in-Transit; Product Withdrawal Expense; and Excess Liability – or coverage beyond standard limits among others. Canna Legal works with several local insurance agencies, we would be happy to make a referral if and when the time is right for you to seek commercial insurance coverage for your business.

This information is provided as a public educational service and is not intended as legal advice. For specific questions about how COVID-19 impacts your cannabis business in California please contact Canna Legal at (707) 576-7175.