How Will The Coronavirus Impact The Cannabis Industry?

It’s here and it’s all over the news.  COVID-19 containment plans are felt in every city and town across the Commonwealth from closing businesses, closing schools, mandating work from home policies and limiting gatherings of more than 25 people.  

The immediate impacts on the cannabis industry are easy to see — the New England Cannabis Convention (NECANN) has been postponed, many cannabis networking events have been canceled or delayed, and investors are being more cautious with their funds.  But the true hidden disruption to the cannabis industry in Massachusetts will come by way of the form of government that Massachusetts uses for most political decision making—the Open Meeting Law and the concept of the open town meeting. 

The Massachusetts Open Meeting Law requires that most meetings of public bodies be held in public.  On March 12, Governor Baker issued an executive order modifying the provisions of the Open Meeting Law that meetings be conducted in a public accessible location, provided that adequate alternative means be instituted to allow for public participation and/or viewing.  It eliminated the requirement that a quorum of the public body be physically present. This allows for the daily activity of the city or town to continue in remote manners under a state of potential quarantine or other forms of social distancing. Many towns are adopting a temporary freeze on physical meetings and even then, meetings will only be held for essential functions.  As local control has such a bearing on the cannabis industry in Massachusetts, this could spell additional delays and therefore costs, upon a cannabis company looking to site in a particular city or town.

Cannabis companies are required to hold community outreach meetings in the city or town in which they choose to site prior to applying for a license with the Cannabis Control Commission.  In cities and towns that have enacted social distancing measures and freezes on physical meetings, cannabis companies and investors should be prepared for an even longer delay in the licensing process.  

For those towns looking to enact cannabis-zoning provisions during the upcoming town meeting season, it may be doubtful that town meetings will even occur, at least in the same manner at which they have in the past.  Without proactive consideration for allowing remote participation at such meetings, it may be unlikely that a town will even be able to achieve a quorum of residents in order to conduct town meeting business. The town of Duxbury already postponed their annual, special town meeting to May, encouraging residents not to attend the originally posted meeting.  At the rate that the virus is spreading, it may be doubtful that a quorum can be obtained for such a meeting even in the month of May.

While the impact on the cannabis industry in Massachusetts will result in additional delays and costs, the social impacts and imperative nature of containment well outweighs the industry concerns.  We have already learned that Massachusetts cannabis entrepreneurs are some of the most resilient folks in the country, and now is the time that the rest of the country might need some of that resiliency.  

Mitzi Hollenbeck is a partner in the Citrin Cooperman’s Rhode Island office and co-leader of the Cannabis Advisory Services Practice. She has more than 15 years of experience providing accounting and audit services, tax planning, business consulting, and forensic services. She can be reached at mhollenbeck@citrincooperman.com

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