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Things have never been easy for Massachusetts cannabis businesses, says Ellen Rosenfeld.
“I’ve been in this over five years; it’s been one fight after another,” says Rosenfeld, president of CommCan, which is licensed by the Massachusetts government to grow and sell both recreational and medical cannabis. “Nothing’s been easy, nothing.”
Less than six months after the company’s first adult-use dispensary opened its doors in Millis, Mass., it was forced to close as part of the state’s efforts to slow the spread of COVID-19. While every other state that has legalized recreational marijuana sales has allowed retailers to continue operating in some fashion, Massachusetts is only allowing dispensaries that exclusively sell to people with medical marijuana cards to stay open.
It doesn’t make sense that adult-use dispensaries have to close when liquor stores are allowed to stay open.
“We were just getting our footing, just getting a sense of the light at the end of the tunnel, where we’re getting a clientele,” Rosenfeld says. She says it doesn’t make sense that her adult-use dispensary has had to close when liquor stores have been allowed to stay open.
CommCan has two medical marijuana dispensaries that are still operating, but the company’s sales have dropped by around 90% Rosenfeld says.
Recreational marijuana use is now legal in 11 states, and medicinal use is allowed in 33. Cannabis use has become more acceptable in society: Barclays estimates the U.S. cannabis market would be $28 billion if it was legalized by the federal government today, hitting $41 billion by 2028, while the CBD market is expected to hit $2.1 billion in consumer sales this year.
But medical experts note that more studies are needed to fill the research gap on the short- and long-term effects of marijuana. The Foundation for a Drug-Free World lists many short-term effects of marijuana usage, including “short-term memory problems; severe anxiety and/or paranoia; sexual problems; psychosis; panic; hallucinations; increased heart rate; lowered reaction time; and loss of sense of personal identity; lower IQ; and addiction.
Still, industry experts say marijuana is less addictive and damaging than cigarettes or drugs. While other small businesses can look to the federal government for help, cannabis companies like CommCan aren’t eligible for programs introduced in the $2.2 trillion CARES Act, such as the Small Business Administration’s Paycheck Protection Program, because the product they sell is illegal at the federal level.
Adding to the frustration for Rosenfeld is the fact that cannabis businesses in Massachusetts pay additional excise and sales taxes — totaling 20% of sales — on top of regular payroll and business taxes. “All that money — more than any other industry, I think — and yet I don’t get to tap into the program that’s out there for everybody else,” she says.
Still, Rosenfeld says CommCan is in a better position than many other cannabis retailers. While she has had to reduce the hours her employees work, she hasn’t had to lay anyone off. That’s largely because the business is self-financed by Rosenfeld and her two brothers.
But other Massachusetts cannabis sellers have had to make difficult decisions. Brian Moran, the CFO of Garden Remedies, a cannabis company that operates both recreational and medical cannabis dispensaries in Melrose, Newton and Marlborough, says his company has lost around 85% of its revenue.
At the end of April, after its adult-use dispensary was closed for more than a month, Garden Remedies laid off around half of its 140 employees. The company is also asking a significant number of the remaining employees, including all managers and executives, to take a salary reduction, Moran said.
‘If we had a Paycheck Protection Program, we literally would use that money for keeping people on our payroll.’
“We are hoping the reduction is very temporary and that we will be able to bring back a substantial number of the employees, but we are also cognizant that, should there be even further delays in reopening, we will need to look again to further cost reduction,” he said.
Non-essential businesses in Massachusetts have been ordered to remain closed until at least May 18.
Citing figures from the Commonwealth Dispensary Association, a trade organization, Moran says around 2,000 people who work in the Massachusetts cannabis industry, out of a total of around 8,000, had been laid off or furloughed by mid-April — and it’s likely that number is now higher.
Having access to the Paycheck Protection Program would have been a “lifeline,” for Garden Remedies, Moran says, allowing the company to reduce or eliminate the need for layoffs or furloughs.
“It would be a complete game changer,” he says. “If we had a Paycheck Protection Program, we literally would use that money for keeping people on our payroll, keeping the checks coming to them, and keeping them on our health care.”
A bill currently before the Massachusetts legislature would create a state version of the program for businesses, like cannabis retailers, that are ineligible for federal assistance.
Moran, who testified in favor of the bill before a joint committee of the Massachusetts House of Representatives and Senate on May 5, says that while his business has already had to make difficult choices, the legislation is still important.
“We need help in order to ensure we can reopen our doors when this is finally over,” he says.
‘If you’re in pain, what’s the replacement to that product? Are you going to turn to your doctor and get something like an opioid and cause that problem?’
The National Cannabis Industry Association is also calling on state governments to help cannabis businesses. “Aside from a couple of early spikes when consumers were worried that they wouldn’t be able to have access, sales have actually stabilized at a level that is below their average. And so all these businesses are still hurting,” says Morgan Fox, the media relations director at the NCIA.
Part of the problem, Moran says, is that even though medical-use dispensaries are still open, there are many reasons why someone who could obtain a medical marijuana card wouldn’t want one.
Some, he says, are worried that their employer might find out. Others are worried about losing federal contracts, or they are veterans afraid they’ll lose their federal benefits.
See also: Investing in cannabis companies can threaten federal employees’ security clearances
“It doesn’t mean that they don’t rely on our product — they’re either going to look for that product elsewhere, which means they’ll go to the illicit market. Or they’ll look for a replacement of that product,” he says. “So if you’re in pain, what’s the replacement to that product? Are you going to turn to your doctor and get something like an opioid and cause that problem? Or are you going to turn to self-medication through alcohol, which obviously doesn’t have very positive effects either?”
“People are still going to manage their pain, their anxiety and their stress,” he adds. “They’re just going to do it now in a less healthy way.”