The start of 2020 looked promising for the cannabis industry as policy reform efforts inched forward at the federal level. The U.S. House passed the SAFE Banking Act in September to allow financial institutions to work with the industry, and in November, the House Judiciary Committee approved the MORE Act to federally decriminalize cannabis, marking the first time a congressional committee has approved legislation to end federal prohibition.

While much of this political progress has slowed as the country deals with the COVID-19 pandemic, NORML Executive Director Erik Altieri says the outlook for the industry remains positive as cannabis businesses are declared essential in many U.S. states’ stay-at-home orders, giving the industry a newfound sense of legitimacy.

Here, Altieri discusses how businesses and consumers are adapting in response to COVID-19, how the political climate has shifted in the wake of the crisis, and how the pandemic might help shape future cannabis policy.

Cannabis Business Times: What are some of the key takeaways regarding the current political climate surrounding cannabis policy?

Erik Altieri: It certainly is clear that the ongoing situation with COVID-19 has slowed down a fair amount of political progress, not just for marijuana law reform but certainly anything political in this country. We had good momentum coming into this year. We had a large number of states that were looking to get [legalization] onto the ballot. We had a number of states looking to pass either medical laws or full legalization at the state legislative level. But come the middle of March, state legislatures basically shut down, and with the stay-at-home orders, it became impossible to collect signatures to get something placed on the ballot. Certainly, the scope of what we thought possible for 2020 seems to have narrowed a bit due to the situation, but on the bright side, we still have a number of states that are moving forward with their initiative process that had already placed it on the ballot prior to the lockdown.

In a lot of ways, we’ve seen some newfound legitimacy through the coronavirus crisis when it comes to a regulated cannabis market. That’s easy to see when you take a look at the incredibly large number of states that have deemed medical marijuana dispensaries and, in a fair amount of states, recreational dispensaries as essential services. Marijuana dispensaries as an essential service just shows how far we’ve come in the past eight or so years in terms of it being taken seriously as a legitimate industry and one that provides an essential good to the communities they operate in.

We’ve really had to grapple with this new reality we’re facing. We’ve pivoted largely to engaging our supporters and members through things they can do from home online, whether that’s helping us collect information for our fall 2020 voter guide, which is the largest voter guide of its kind for marijuana policy, [or] whether it’s reaching out to state representatives or congressmen using our tools. We’ve found new ways to engage people, given the situation they currently find themselves in.

There are reasons to be a little sad about some of the missed opportunities we may have had through 2020, but there are also a lot of opportunities and newfound respect for the issue that has come through this.

CBT: How is the COVID-19 pandemic shaping cannabis policy? How might it impact pending federal and state cannabis legislation?

EA: It’s still a large question mark when it comes to how this will impact our pending legislation, particularly the MORE Act at the federal level, which was the largest piece of marijuana reform legislation to ever be approved by a committee federally at the end of 2019. We fully expected to pass that through the full House of Representatives this year. Given their current schedule, that’s still an open question, depending on how quickly they can get back to some sort of standard operating business here in Congress and Washington, D.C.

I do think that states that still practice prohibition are going to start to look at their state funding, which is taking a huge hit due to the ongoing pandemic, and whether it makes any sense at all—or if it did in the first place—to arrest responsible adults for simple marijuana possession. I think it’s going to have an impact on the way people form their values and public policy and how marijuana plays into that. Certainly, [after] being deemed essential businesses and the legitimacy that came with the services they were able to provide during the pandemic, the American public will further [support] the idea of legalization after this is behind us.

It’s also interesting to note, when you’re looking at how states were reacting to it, [that] a large number of states, for fear of spread of the disease in the prison population, let non-violent offenders go if all their charges were largely drug offenses in particular. Most of them were in there for marijuana, so we’re even seeing some sort of acknowledgement by state governments that, when push came to shove, these individuals were not a terrible threat to society, and maybe we’re a little safer with marijuana offenders not filling our prisons than with them in there.

CBT: How is the pandemic impacting cannabis use patterns among consumers?

EA: A lot of that data is still pending. I know there are a number of folks doing analysis and studies into just that topic, and we’ve worked with some groups to help collect that data. Certainly, what we did see in the very beginning as the stay-at-home orders started to come down [is] cannabis sales boomed as people planned to be largely homebound for the foreseeable future. But we were also rather aggressive in informing our supporters and consumers broadly about the safest practices on how marijuana consumption interplays with COVID-19.

We issued a large number of recommendations, [and] people have adopted them, whether it’s not sharing joints and bowls and other marijuana consumables at this point for fear of spreading germs, or whether it’s [people in] vulnerable populations or [who] have concerns about respiratory health [looking] at edibles, tinctures and minimal vaporization because any real combustion still does have some effect on the respiratory system. If you’re in a vulnerable population, you’d probably like to avoid combusting cannabis for the time being, so we’re giving consumers that information. I think we’ve seen those habits adapt to our new reality, whether that is switching to a less combustible form of consumption for the time being, not sharing marijuana in a way that most of us consumers are pretty used to, or what we saw [this week] on 4/20, when it became clear that it would be unwise for us to typically celebrate as most marijuana consumers do, getting together with large groups of friends and sharing cannabis on the holiday. That all had to be shifted online social interaction—webinars and web chats. Consumers are adapting, and I think as the months go on, we’ll see more concrete data to show that is true.

CBT: What do you think the outlook is for the cannabis industry? How might cultivation and dispensary operations permanently change due to the COVID-19 crisis?

EA: I think it will impact the cannabis industry broadly in probably a number of different ways. First, the cannabis industry is no more immune than other industries when it comes to these large economic downturns. As we see continued growth in unemployment and continued stay-at-home orders, that clearly is prime to impact retail sales of any product, and certainly cannabis would be a part of that. On the other hand, we’ve begun to see a shift in how states are willing to handle cannabis commerce. A number of states that had previously not allowed things like online ordering, curbside pickup or home delivery have implemented those practices in light of the COVID situation. Hopefully, by instituting those now and seeing they can work and be executed safely and responsibly, we’ll see states with those medical and adult-use markets adopt some more consumer convenience models, whether it’s online orders or home delivery.

Cannabis businesses are also struggling in ways that some businesses aren’t. While in a large number of states they do have the opportunity to remain open as an essential business, given marijuana’s ongoing federal status as a Schedule I drug, they are largely left out of most of these small business assistance efforts that the federal government is working on, whether that’s getting SBA loans or accessing emergency funding that the federal government is giving out to small businesses. At this point in time, cannabis businesses are not allowed to collect on that assistance, so they’ll be facing things that if you were selling produce or even alcohol, you wouldn’t necessarily have to face. That’s a fight we have ongoing at the federal level, and we’ve been taking a pretty active role in working to ensure that in upcoming aid packages, cannabis businesses will have access to that sort of assistance.

Certainly, they were already facing some struggles that other businesses didn’t, whether it was the lack of access to banking, which becomes yet another issue when you’re dealing with a pandemic and the exchange of cash that could be a lot tougher to track and regulate when you’re dealing with a business that’s also doing deliveries, curbside [and] operating in this new coronavirus reality. Operating as a cash-only business is clearly a huge hurdle, but [so is] the way they’re treated differently by the IRS, having to pay taxes in cash [and] being unable to claim standard business deductions that other businesses can, like payroll deductions [and] operating expenses. Those things are colliding now. They already had these unique challenges and they’ll continue to have to deal with more if they’re left out of financial aid for small businesses.

CBT: What are some of NORML’s broader goals both now and in the future, once the COVID-19 crisis is behind us?

EA: NORML’s large focus in recent history was the ultimate descheduling of marijuana from the Controlled Substances Act at the federal level, and that was a goal that saw progress through 2019 and the early part of 2020. We do expect that once our federal government is back and operational, those discussions will resume. Some of those might be pushed back into 2021, given that it seems our typical way of life here might not be returning for several months, and then we’re going to be up against a large presidential election, an election where a large number of senators and the entire House of Representatives is up for reelection.

Generally, in election years, passing legislation of any sort is a bit more challenging. We’ll continue to focus on federal rescheduling as a large priority, but we’re also shifting to an election year stance. Despite the fact that it’s hard to imagine conducting broad scale elections at this point, they will happen in November, and we need to be prepared. We’ve been spending a lot of time building out resources for our voter guide and voter registration efforts through the corona situation, and in some small ways, I believe those efforts are seeing a bit of a boost because of the fact that most of America is stuck in their homes, looking for worthwhile projects that they feel actually have an impact. Helping us out with volunteer efforts virtually is something that I think a lot more people are now looking to engage in, just given that they’re not going to the office every day, and [are dealing with] all the other challenges of COVID. It provides a nice outlet where you can do something productive that impacts a policy area that you hold very dear. [We’re] now using this time to build out the infrastructure [and] the training, so when we come out on the other side of this, the movement will be more prepared than ever.

Editor’s Note: This interview has been edited for style, length and clarity.

The COVID-19 pandemic has brought much of the world to a screeching halt as municipalities, states and entire countries respond to the crisis.

While the U.S. cannabis industry has been deemed essential in many states, cultivators looking to launch or expand their operations may be left wondering how to navigate pending construction projects in the wake of the pandemic.

According to Ryan Douglas, the owner of Ryan Douglas Cultivation LLC, a company that provides cannabis cultivation services, it is critical that cultivators press on as much as possible with their startup or expansion plans during the pandemic in order to meet patient and consumer demand, as well as prepare for a speedy return to normalcy after the crisis.

Here, he shares how construction projects may be affected by COVID-19, as well as steps that cultivators can take to minimize its impact on their plans.

Cannabis Business Times: Broadly speaking, how might cannabis cultivation facility construction projects be affected by the COVID-19 crisis?

Ryan Douglas: What I would assume is that you’ll certainly have delays. If someone was building an indoor facility or a greenhouse facility, since the entire economy is affected, I’d assume growers are experiencing delays in the manufacturing of the equipment and the shipping of the equipment, and then of course the construction of the facility. I don’t think there’s any way around that.

CBT: How are you advising your clients to deal with pending construction projects during this time?

RD: What I would tell clients is to continue with the construction plan. Their hands are tied in terms of the equipment they can receive and the progress they can make on construction, but the reason that these companies initiated new construction projects or expansion projects in the first place is because they saw a demand to do so. I don’t think that with the COVID scare that cannabis is going to go away. I think it’s only on pause.

One benefit for our industry is it’s not like the airline industry or the hotel industry, which have taken a severe beating and, in my opinion, are going to take a long time to ramp back up to where they were just six months ago. What we’ve seen on the news with cannabis is that a lot of states have deemed it an essential service, which indicates how important it is to society. If the dispensaries are allowed to operate and the consumers are allowed to get out of the house and go to the dispensary it’s going to go immediately back to where we were.

If companies started a construction project and now they’re a bit timid or scared, I don’t think it makes sense to stop because the companies that continue building through this downturn are going to be rewarded with sales once this is over, and their competitors are just going to be finishing construction, at best.

I was thinking that perhaps some states might take a more favorable look at legalization in the future because everyone is taking quite a beating economically, and the tax revenue from cannabis might be more attractive now in states that were borderline or against it before.

CBT: How might it impact cannabis companies if they have to put their projects on hold, and what steps can they take to minimize the impact on their businesses?

RD: It’s tricky to stop or slow down the production of cannabis. The reason that a cultivation staff exists is because those people are necessary to successfully produce the crop, so if you put a production plan on pause or try to reduce the amount of people taking care of that crop, inevitably you’re going to have crop problems.

If a company needs to put construction on hold or stop construction altogether because of a down month or two, I wonder if it was an appropriate decision to expand in the first place. If construction continuing depends on last week’s income, it seems like a company that’s running a really fine line. There’s not much buffer there. If you’re running on that kind of a budget, you put a lot of things at risk—certainly the business, the patients you serve and the employees that depend on your business for their livelihood. Maybe it’s tough love or it sounds harsh, but if a scare like we’ve had over the last month or two causes a halt, maybe that company wasn’t in a good position to expand or build in the first place.

CBT: For companies that are moving forward with buildout and construction projects during this time, what steps can they take to ensure the project goes smoothly?

RD: I think more than ever, it would be good to avoid overcomplicating things during expansion or startup. I think now more than ever, you’re going to have immediate demand once things calm down, and you’ve got places like Illinois, where they can’t meet the demand for adult-use, so they need companies to protect their medical patient base and they also need to expand rapidly to meet the new adult-use demand. Prior to the COVID-19 scare, I know they were planning to issue even more licenses in Illinois, so the industry is thriving and there’s a lot of demand there. You’ve got companies that are in the fortunate position to be able to take advantage of that market. What they need to do is expand rapidly and have product for sale.

My recommendation post-COVID would be the same as before the COVID scare, which is really to try to simplify the process of launching or expanding the business. What some groups tend to do is overcomplicate things by, for example, hiring an inexperienced head grower or trying to launch production with way too many genetics, or they launch production using every single new technology out there. When you combine a lot of those factors together, it’s overwhelming and sometimes the cultivation program crashes before it even has a chance to begin.

Once this calms down, meeting demand will be as crucial as ever, and doing it in a timely manner will be critical. I think if companies can focus on growing in a simplified manner, they can duplicate what already worked well prior instead of introducing 100 new unknowns to the situation, which could derail progress and prevent them from coming to market rapidly.

CBT: Are there any other broad lessons that cultivators can take away from the COVID-19 crisis that could maybe carry over into their businesses when things return to normal?

RD: The most important would be to ensure that there’s enough capital to weather any kind of downturn or disruption. Months ago, we had a disruption due to the vape pen scare, and now we’ve had a disruption due to a pandemic, but I think the most successful companies are the ones that are rock solid, the ones that have the capital to be able to withstand downturns or big problems. That’s my best advice, which is, again, the same advice I would give to a company before all of this happened anyway.

Editor’s Note: This interview has been edited for style, length and clarity.