13 May Corona-Cannabis Update #11: Banking Relief in Stimulus Bill, MA May Reopen Adult Use Stores

The sun is shining, folks are figuring out what socially distant Memorial Day will look like (burgers and masks?), and many states are beginning to reopen while at the same time the COVID-19 death numbers continue to rise. It remains a very uncertain time for our tiny planet and its populace, along with the now struggling global economy. At the same time, many businesses are thriving or have not really been meaningfully hurt by the pandemic. As we begin to think about a post-coronavirus world, what should we be thinking about? In the next few installments we will add some thoughts on that at the end of each post. Then feel free to come back and test my prognosticating skills when we get there. Here are the latest updates on the impact of COVID-19 on the cannabis and hemp industry:

• Banking relief in stimulus? The US House of Representatives included, essentially, the SAFE Banking Act, which supports and encourages banks to take on cannabis industry customers, in its new draft coronavirus stimulus bill. The bill itself may face challenges in the Senate, and many feel the SAFE Act has little to no chance of making it through even if so. I might not even cover it, except for reports that the Senate Republicans initially tweeted opposition to SAFE, but upon learning that their own Cory Gardner (R-CO) is a key sponsor, deleted that tweet. Read: hope.
• Massachusetts to reopen adult use stores. After industry reps met with the Governor, it appears a plan is developing to reopen Massachusetts’ adult use cannabis stores. Medical marijuana shops remained open as essential during their lockdown, but now the state is getting ready, with limitations such as curbside delivery only, to reopen all stores.
• FDA warns about COVID claims. The FDA has sent additional warning letters to CBD purveyors making claims about the product’s ability to potentially treat COVID-19.
• Best April sales ever. Reports are that April cannabis sales have beaten all previous Aprils, despite (or because of?) the pandemic. That said, sales were down a bit from March, which many attribute to users stocking up as lock-down orders took hold.
• Colorado bankruptcy case update. Some interesting legal issues arising in a Colorado bankruptcy filing by a company primarily engaged in hemp manufacturing. The trustee is challenging their right to use federal bankruptcy because the company’s subsidiaries are involved in federally illegal cannabis production.

As noted, despite the small amount of hope, sadly I do not wish to bet that the SAFE Banking Act will make it into any additional stimulus bill, if even one can pass. MA does indeed seem ready to reopen their adult use stores, hopefully there has not been too much damage to operators that were forced to shut down. People: please stop making claims about CBD, especially if they are related to COVID. It hurts all of us. We do seem to have a pandemic-resistant business as we noted last week, this bodes well for the remainder of the COVID madness. We should watch this Colorado bankruptcy case as it may offer another interesting loophole to access federal court protection by going bankrupt with a company selling hemp even though other subsidiaries are selling marijuana.

Post-pandemic tip of the week: Retailing is going to change fundamentally, even after the virus is long gone. E-commerce, in late 2019 representing about 12% of all retail sales, likely will skyrocket as a percentage during this period, and permanently thereafter in my view. We have already seen multiple major department store chains file for bankruptcy after just a month or two of being closed. When Costco is delivering do you really need to go there? Impact on cannabis: somewhat uncertain, but expect delivery and online sales to keep growing even after the virus recedes.