Business

The Cannabis Industry is “Essential:” What does that mean?

By Dan Mitchell May 1, 2020
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Dan Mitchell is a veteran journalist based in Oakland, Calif. He has written for The New York Times, Fortune, Wired, National Public Radio, the San Francisco Chronicle, the Chicago Tribun...
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Dan Mitchell is a veteran journalist based in Oakland, Calif. He has written for The New York Times, Fortune, Wired, National Public Radio, the San Francisco Chronicle, the Chicago Tribune, Leafly, and many other publications.
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The Covid-19 virus has had a way of exposing the essence of our people, institutions, and ideas. We know who our essential workers are, because we have publicly and legally identified them. We’ve learned many of our fellow citizens believe a virus that has killed tens of thousands of Americans within weeks isn’t much to worry about.

The virus has also forced legal states to acknowledge that cannabis is not just a legitimate business, but an “essential” one. But we still differ on what makes it essential or what that means for the industry’s future. 

The politicians who decided to exempt pot from business shutdowns no doubt were motivated in part by tax revenues. But there’s more to it. It’s a complicated question because people take cannabis for many reasons, . And that doesn’t even count hemp’s industrial uses.

What is cannabis?

Pot’s essential status in most legal states was a “watershed moment for the industry,” said Conrad Gregory, president of the California Cannabis Industry Association and head of government relations for dispensary chain Harborside. It probably saved a lot of businesses from going under. It also served to validate the industry’s legitimacy. 

Or did it? In the long run, the decision seems likely to have a profoundly positive impact for the industry, according to pretty much everybody I’ve talked to over the past month and a half. But in the short run, the pandemic has largely entrenched existing positions. The arguments we were having about cannabis before the pandemic hit are still going on; they’re just a lot starker now.

These arguments include the fight over how cannabis should be classified. The answer has legal, political, cultural, scientific, and medical implications. It will help determine, among other things, how it will be regulated and taxed in the future.  Should we treat it like booze? Like food? Like pharmaceuticals? All of which are essential. Like spa treatments, which are not essential? Is it a pastime? A vice? A  health elixir? It is to some extent all of those things, which is why some local governments have struggled to decide what to do about dispensaries amidst the lockdown. 

Meanwhile,  the federal government’s first rounds of financial stimulus went to all kinds of businesses, but cannabis was conspicuously omitted. It’s far from certain the industry will be included in the future aid packages now being debated in Congress. 

For now, the details of how to deal with cannabis amid the pandemic are playing out mostly on the state and local levels.

Some of the debates come down to whether “medical” and “recreational” pot can be practically separated. Several California cities, including San Francisco, Berkeley, and San Jose, tried to put various restrictions on dispensaries. But then they backed down when dispensaries and consumers complained.

The Santa Clara County government issued an order a couple of weeks ago declaring that only MED could be sold at dispensaries, and consumers could only purchase REC via delivery.

At first, local dispensaries scrambled to help customers obtain medical cards from the state, and to increase their delivery capacity. Police in San Jose, the only city in the county with dispensaries, have enforcement jurisdiction on the matter, and after a few days, they decided to follow the letter of Proposition 64, which legalized adult-use cannabis in 2016. 

Whether cannabis was “REC” or “MED” the cops said, would be left up to the dispensaries to decide. In other words, it’s a distinction without a difference. The dispensaries got back to business. “All guests are now welcome to shop at Airfield,” said Mark Matulich, founder and CEO of Airfield Supply, the city’s biggest dispensary. 

REC is “Also good for you”

California law doesn’t discern, in a practical sense, between MED and REC, because there really is no difference. “I think all cannabis is medical,” said James Anthony, a cannabis lawyer based in Oakland who lobbied city governments to back off their restrictions.

“It’s like basketball. It’s ‘recreational,’ but it’s also good for you.” He noted that grocery stores and pharmacies are both considered essential,  but if those stores sell booze, you can still buy it there. Even liquor stores are essential in most jurisdictions, because you can buy food there, even if it’s just a bag of Cheetos. “You can get pizza and a pitcher of margaritas delivered to your door,” Anthony said. “But we’re going to argue about cannabis, which a lot of people rely on as a medication?” 

At the moment, it seems like the most popular answer to the question “What is cannabis” is a party drug, indulgence or even a sin. On Monday, Max A. Cherney, a reporter for MarketWatch who has landed some big scoops on the weed beat, tweeted that his portfolio at the Dow Jones-owned site had been expanded. “New beat: sin,” he wrote. “Booze, tobacco, gambling. And of course, weed.” 

Cherney’s tweet seems to have been delivered with a little wink, but MarketWatch isn’t the only organization that lumps all those things into a single category. On the surface, it might seem to make sense: a lot of people use cannabis purely for fun. And there are some risks associated with it, so in those cases, it could be considered a “vice.” 

But cannabis is very different from pure vices like gambling and tobacco. Nobody gambles or smokes cigarettes to relieve pain, treat their epilepsy or get a good night’s sleep. It’s different from booze, too. As research into traffic fatalities and domestic violence has shown, booze is the much more harmful substance, in terms of both human health and social dysfunction.

Cannabis as a vice or a sin will likely continue to be a popular notion. “We’re still dealing with the hangover from prohibition,” Gregory said. But since cannabis started to become legalized about eight years ago, “We’ve seen that, contrary to what a lot of people warned, the sky hasn’t fallen.” Consumption hasn’t soared, for example, and “we’re not even close to the rates of alcohol use.”

The “essential” designation will likely increase social acceptance, said Andrew DeAngelo, a cannabis-business consultant and a co-founder of Harborside. “If there had been no cannabis prohibition limiting access to the plant for a century, then this designation probably wouldn’t even have been needed.”

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Dan Mitchell
Business columnist