When the team at Torrey Holistics realized that health care workers on the frontlines of the COVID-19 pandemic were in dire need of face masks and other necessary medical supplies, co-owner Tony Hall leveraged his background in chemical and safety supplies to help fill the gap.
Since mid-March, Hall and Torrey Holistics co-owner Doug Gans have donated more than 7,000 N95 face masks and more than 10,000 units of hand sanitizer to various health centers and local organizations, as well as to the San Diego-based dispensary’s staff and customers.
Photos courtesy of Torrey Holistics
The Torrey Holistics staff is wearing masks and gloves to serve customers during the COVID-19 outbreak.
“[We] were just hearing all these stories from doctors and nurses who were having to reuse their masks, and how dangerous that was,” Ruthie Edelson, Torrey Holistics’ marketing director, told Cannabis Business Times.
The Torrey Holistics team visited six different hospitals and health clinics, including the American Red Cross, VA San Diego, Family Health Centers of San Diego, Scripps Hospital, UCSD Jacobs Medical Center, St. Paul’s Senior Services and Remedy RX, to deliver the supplies personally.
In addition, Torrey Holistics is distributing free hand sanitizer to its curbside pickup and delivery customers.
The dispensary will donate a portion of its April sales to St. Paul’s Senior Services and the Senior Adult Department at the Lawrence Family JCC to help support efforts to protect the vulnerable senior population during the pandemic.
Torrey Holistics opened in 2015 as a medical cannabis dispensary and was one of the first California retailers to receive an adult-use license in December 2017, Edelson said.
“We are definitely small and mighty,” she said, adding that the Torrey Holistics team has always centered its business around education and community.
The dispensary has participated in several community outreach programs during its years of operation, including donations to area food banks and beach clean-up days.
During these uncertain times, Torrey Holistics is continuing to support those in need while protecting its own staff and customers as local and state policies continue to evolve in response to the COVID-19 outbreak.
“The city continually updates us on what we need to do ensure that the staff is safe [and] ensure that our customers are safe,” said Kalina Fernandez, Torrey Holistics’ purchasing manager.
The dispensary has shifted its operations to curbside pickup and delivery services, and the management
The dispensary has collected peanut butter to support local food banks.
team is constantly updating the store’s SOPs to align with new guidance from local and state officials.
“We are keeping clearly marked social distancing guidelines in the store, in the lobby and outside of our store,” Fernandez said. “All of our drivers and all of our staff are wearing masks and gloves. We’re giving out hand sanitizer as well as using hand sanitizer. We’ve installed several hand sanitizer units [in what] seems like every square inch of our shop, but it is what it is and it’s what needs to happen right now.”
Roughly 75% of the dispensary’s sales are now conducted through its delivery service, she added, and the store has seen a decrease in vape sales.
“I think we’re back on that bandwagon of bringing attention to the fact that what’s going on right now is an upper respiratory issue, and vaping and upper respiratory just don’t mix,” Fernandez said. “Vape sales have gone down, but oddly enough, flower sales have gone up.”
Torrey Holistics’ customers are purchasing product in larger quantities since the start of the COVID-19 outbreak, she added, and the company’s supply chain has remained largely uninterrupted to allow the dispensary to meet this increased demand.
Looking ahead to 4/20, the company will try to maintain business as usual, but it has canceled on-site vendors who had planned to visit the store to interact with customers. Torrey Holistics is also encouraging customers to use its curbside pickup and delivery services to minimize the number of people in the store.
“We’re going to make it work and we’re going to do what we can to give our customers not only the best service, but also great deals,” Fernandez said. “We don’t want to encourage people to wait in line for long periods of time, so we’re focusing our specials and deals to bring people into curbside and/or the delivery service as opposed to coming in. It’s just a sharp pivot."
mseisenhut | Adobe Stock
DEA Deschedules Epidiolex, Senators Urge SBA to Extend Economic Assistance to Cannabis Businesses: Week in Review
Effective immediately, the DEA has descheduled GW Pharmaceuticals’ Epidiolex, which was initially listed under Schedule V following its approval in 2018.
This week, the U.S. Drug Enforcement Administration (DEA) descheduled GW Pharmaceuticals’ Epidiolex, an anti-epileptic drug that contains cannabidiol (CBD). Elsewhere, a coalition of U.S. senators sent a letter to leadership asking that cannabis businesses qualify for loans and other federal relief programs in the wake of the COVID-19 crisis.
Here, we’ve rounded up the 10 headlines you need to know before this week is over.
Federal: Global Cannabinoids, one of the largest retailers of American-grown hemp and CBD, has transitioned its operations to hand sanitizer production to address the supply shortage during the COVID-19 pandemic. The company has formed a new entity, Global Sanitizers, and its line of hand sanitizers is now being sold to big box retailers under the “Medically Minded” brand. Read more
Effective immediately, the DEA has descheduled GW Pharmaceuticals’ Epidiolex, an anti-epileptic drug that contains CBD, in a move that may foreshadow a future of pharmaceutical drugs that contain the compound. Initially, following approval from the DEA in 2018, Epidiolex was listed under Schedule V. Read more
The COVID-19 pandemic has had a significant impact on the day-to-day operations of cannabis cultivators, dispensaries and industry suppliers, according to recent survey conducted by Cannabis Business Times at the end of March. More than half of participants (54%) responded “a great deal” or “a lot” when asked “How much of an impact has the COVID-19 outbreak had on your operation?” Read more
A coalition of U.S. senators sent a letter to leadership, asking that the Small Business Administration (SBA) extend economic assistance to the cannabis industry. Last month, President Trump instructed the SBA to allocate $50 billion to low-interest loans to help small businesses during the COVID-19 pandemic, but cannabis businesses were excluded from these relief efforts. Read more
Indiana University researchers have presented data that suggest cases of electronic cigarette or vaping-associated lung injury (EVALI) are more prevalent in states that do not have adult-use dispensaries. The study was published in JAMA: The Journal of the American Medical Association on April 6 by researchers from Indiana University’s School of Medicine and O’Neill School of Public and Environmental Affairs. Read more
Ohio: The Ohio Board of Pharmacy has issued new guidance that allows the state’s medical cannabis dispensaries to offer curbside pickup to their customers during the COVID-19 crisis. Under the new rules, retailers can conduct medical cannabis sales in their parking lots or on the sidewalks outside of their stores, so patients do not have to enter the dispensary or even leave their cars. Read more
Arizona: Smart and Safe Arizona—a campaign that aims to place a cannabis legalization imitative on the state’s November ballot—is one of four ballot initiative campaigns in the state that filed a petition to ask the Arizona Supreme Court to allow the campaigns to gather electronic signatures amid the COVID-19 crisis. The petition asks the court to allow Smart and Safe Arizona, Arizonans for Second Chances, Invest in Education, and Save Our Schools Arizona to collect signatures digitally through E-Qual, the state’s online signature collection platform. Read more
Colorado: Charlotte Figi, the young girl whose medical condition inspired the Stanley Brothers to develop the low-THC strain Charlotte’s Web, has died due to COVID-19 symptoms at the age of 13. “Charlotte is no longer suffering,” photographer Nichole Montanez wrote on behalf of the Figi family. “She is seizure-free forever. Thank you so much for all of your love.” Read more
Canada: In an April 6 statement, the Business Development Bank of Canada (BDC) issued a statement to clarify that all legal businesses—including cannabis businesses—will be eligible for the Business Credit Availability Program (BCAP), which includes access to the Canada Emergency Business Account and the SME Loan and Guarantee Program. Last month, Canadian cannabis operators were outraged when Export Development Canada (EDC) and the BDC initially said that the industry would not qualify for business loans and other assistance aimed at boosting the economy during the COVID-19 crisis. Read more
Ontario’s cannabis retailers are allowed to reopen with delivery and in-store pickup services under an April 7 emergency order. This is welcome news for dispensaries that were told last week that they had been removed from the province’s list of essential businesses, which effectively shut the stores down until further notice. Read more
Charlotte's Web Inspiration Passes Away, Hemp Companies Start Making Hand Sanitizer: Week In Review
Several hemp companies have begun making hand sanitizer to meet the growing need in the U.S.
This week, Charlotte Figi, whose medical condition inspired the low-THC strain, and later company name, Charlotte’s Web, passed away from COVID-19 complications. A growing number of hemp companies across the country have begun making hand sanitizer to fill the growing need in the U.S.
Here are this week’s top headlines you might have missed.
National: As the coronavirus continues to permeate every corner of daily life, it’s led to a crossroads for the newly developing cannabidiol (CBD) industry. Companies that have an online presence have fared well so far, but smaller businesses and those without online sales may have greater challenges ahead. Read more
Colorado: Charlotte Figi, the young girl whose medical condition inspired the Stanley Brothers to develop the low-THC strain Charlotte’s Web, has died due to COVID-19 symptoms. She was 13. Read more Meanwhile, Hemp Depot, a vertically integrated hemp and CBD company, has started producing hand sanitizer to help with the spread of the coronavirus and to retain its staff. Read more
Massachusetts: Boston-based Burns Levinson, along with the team from Vicente Sederberg, recently discussed the additional steps hemp businesses may need to take when applying for loans that are now available from the federal government’s new small business loan packages. Read more
Nevada: Three lawsuits allege a cannabis entrepreneur defrauded investors by failing to pay back $1.2 million in loans. Solace Holdings LLLP, Aether Gardens and Telloni Holdings Limited filed the lawsuits against entrepreneur Case Mandel and his companies Cannadips LLC and Trinidad Consulting LLC in the U.S. District Court for the District of Nevada, and state courts in Nevada and California. Read more
Pennsylvania: Thar Process, a hemp processing company in O’Hara Township, Pa., near Pittsburgh, has begun to create hand sanitizer to protect its city’s homeless population, its local government workers and the company’s own employees from COVID-19. Read more
California is the largest cannabis market in the U.S., but it also is the state market that arguably has grappled with the greatest challenges since adult-use legalization rolled out there Jan. 1, 2018.
With a many-decades-long history of cannabis cultivation and a largely unregulated medical cannabis market that thrived for nearly a quarter-century since the passage of Proposition 215 (also called the Compassionate Use Act of 1996), California had become home to more than 68,000 cannabis farmers, as Cannabis Business Timesreported in 2018. The state’s cannabis market was predominantly comprised of smaller, family-run cannabis farms and dispensaries, and it began crumbling under the weight of the adult-use regulatory structure and accompanying costs (licensing and testing fees, and exorbitant taxes).
Not unrelated, the state’s illicit market continues to dominate cannabis sales by the billions of dollars. In late 2019, The Motley Foolreported on estimates that projected legal cannabis sales would fall $5.6 billion short of illicit-market sales that year.
Now, more than two years into the state’s adult-use program, the struggle continues, and unless things change, the future of the state’s legal market is grim, says Hezekiah Allen, a former cannabis grower who has an extensive history in the California market.
Allen is perhaps most well-known for his work as executive director of the California Growers Association (CGA) from 2015-2018, where he advocated and lobbied for legislation that protected the state’s extensive cannabis heritage, including its smaller, family-run farms. He had formed HDA Public Affairs in 2010 to separate and protect himself and his then-gray-market grow from his lobbying and advocacy work.
Today, in addition to still operating HDA Public Affairs, Allen spends the bulk of his time working with Emerald Grown, a corporation of California cannabis cooperatives whose “goal is to get the farmers’ products to market and maximize the returns to the farmer,” he says. The organization has agreements with about 45 growers, Allen adds.
Here, Cannabis Business Times speaks with Allen about the current outlook of the state’s cannabis businesses, the impacts of the coronavirus pandemic on the already strained legal cannabis market, and what needs to change for the state’s industry, which he says “will fail without government intervention.”
Noelle Skodzinski: What are you seeing as far as the overall outlook of California farmers?
Hezekiah Allen: Before this crisis, the outlook was bad. California has created a regulated market within which it's very difficult for a small or mid-sized businesses to succeed. And honestly, even the large businesses are finding it very hard to succeed. The current crisis has not made that any better.
I think before this crisis, we probably could have limped along for two or three more years. But most businesses, without some significant change to the regulatory and the taxation scheme, especially small businesses, would have failed in the next few years. I think this is likely to expedite that. I don't think in and of itself it's creating that market failure. But I do think it is likely to expedite it.
Allen
Skodzinski: What are the biggest impacts the coronavirus pandemic is having on cannabis businesses, aside from the usual challenges of lack of access to small-business loans, tax deductions and any support being offered to non-cannabis businesses by government agencies, such as the Small Business Administration?
Allen: Not a lot of facilities that I know are set up with six feet of distance between workspaces. So retooling workspace and reduced capacity because of reduced workspaces, workers being out, not wanting to come into work, not being able to come to work. So that whole typical scope of problems that everyone's dealing with.
I think the larger picture though is with unemployment spiking the way it is, I don't buy into the theory that cannabis is recession-proof. I think that medical is a bit more so, but a lot of patients are income-sensitive, and even if they don't consider [cannabis] a luxury item, they may not actually have the money to purchase it. That's why the compassion argument was so important and why we've worked so hard to make sure that that medicine can get to the market in the first place.
But I think that over the next several months we are going to see some pretty significant downturns in consumer spending.
I also think one thing that really sets us apart, and it’s what you mentioned—that we're not eligible for any federal support, and we know that. … We can't even get just a typical, normal small business loan. These types of events [like the current situation] are when those safety nets can be helpful: a low-cost bridge loan, operating capital loans, the SBA is making grants now for goodness sake, but none of that's available to us.
Couple all of that with the reality that we're also the only business that can't deduct our operating costs, and it's going to be pretty bad if things don't give. Between 280E, the lack of access to banking, … to federal relief tools, it's amazing we can keep operating. I think it represents a major turning point in the national dialogue.
Underneath that “essential” categorization, there's a much more concerning reality that we're going to do everything we can to get ahead of. We were born fighters, and that's what it is.
Skodzinski:Governor Gavin Newsom announced in January plans to consolidate by July 2021 the state’s three cannabis licensing authorities (the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health) into a single Department of Cannabis Control, and as part of that, a proposal to “[simplify] cannabis tax administration by changing the point of collection.” In your opinion, what needs to be done aside from obviously providing cannabis businesses the benefits that non-cannabis businesses get?
Allen: The cannabis business community has some real difficult questions we need to answer. From my perspective, what needs to change is the taxes. And since 2017, we've known with certainty what the guidelines of those changes are. There are enough stakeholders in Sacramento that have no interest in cannabis whatsoever other than an interest in the revenue that we generate, who have made very clear what they will and won't vote for. Tax measures take a two-thirds vote; we need to get a lot of votes. So there are a lot of things I wish we could do that … just aren't on the table, unfortunately.
We need to decide whether or not we're willing to live with the options that are on the table.
The options that are on the table are to suspend the cultivation tax and increase the excise tax. Suspending the cultivation tax results in a loss of revenue; increase the excise tax to make up for that revenue. Or create a tiered cultivation tax where the first X amount of pounds are tax exempt and any pounds above 10,000 are taxed at a higher rate, and shift that burden to the folks with larger harvests.
There isn't a pathway to the votes needed to pass a tax reduction, and I think that's something that we need to come face to face with. And so … I'm okay with either of those options. If somebody is growing 50,000 pounds, I'm significantly less concerned about their tax burden than somebody who's trying to survive growing a few hundred. That's just my bias. Not everyone shares that bias, but I'm okay with that.
I'm also okay with getting rid of the cultivation tax entirely and shifting it to the excise tax. We know beyond a shadow of a doubt, at least I do, that we have the votes to pass that option. As of yet, the industry has not backed anything that would be revenue-neutral, and that's the key. We can pass revenue-neutral tax reform, we can't pass revenue-negative tax reform. And that's been true for several years now, and I think it's on us.
What I think we need to do is decide whether or not that's going to work for us.
I don't think consolidating the agencies makes a lot of sense. … Our bottom line is that we're farmers, we want to be regulated like agriculture. Moving us out of the Department of Food and Agriculture seems like a step in the wrong direction.
If we want to talk big-picture policy changes that could make a massive impact, we could recognize cannabis cultivation as agriculture and cannabis flower as an agricultural product. That would be a game changer—probably such a game changer that it's impractical at this point. For example, if that were to happen, we would then become a right-to-farm crop, which would essentially overrule local bans, which I just don't think is viable at the moment. I think that's why the Secretary of Agriculture hasn't taken that step.
But that needs to remain the longer-term goal—full recognition as agriculture—and anything that moves us away from that, I will be very cautious of, if not openly opposed to.
Beyond that, I think we need to talk more about this idea that if a farm is not damaging natural resources, then there shouldn't be as many compliance and regulatory costs. … We need to operate our farms with balance within that natural system. But if we can demonstrate through third-party certified best practices that we're achieving those resource-conservation goals, then we need to reduce the costs, extend the timelines, and reduce the rigor of the compliance tasks.
“I think that we have every reason to believe that the experiment of regulated cannabis in California will fail without government intervention.”
- Hezekiah Allen
So that's sort of my suite of three: We really need to come up with something realistic on taxes. I know we have the votes to pass it, if we meet that revenue, net-neutral threshold. We need to keep moving toward recognition as ag. And we need to focus on the impacts to natural resources, not checking the boxes on regulatory worksheets.
Skodzinski: The illicit market has continued to thrive in California. Do you think it is going to become further invigorated if changes are not made to the existing regulatory and tax structure?
Allen: That's been my concern all along. … Folks were treating this as though it were a new market. … [That] was very damaging. The strength and entrenched nature of the existing marketplace was hugely underestimated. It's already, even before this crisis, outperforming the regulated market by maybe 300%.
Most of the product grown and sold in the state is still unregulated and untaxed. This [current economic situation] isn't going to improve that for sure.
And I don't think that the regulated market, with all of its additional costs and taxes, is going to stand a chance. It wasn't able to compete with the unregulated market pricing before, and it's going to be less able to do so now.
As consumers become more cost-sensitive, they're going to look at products that are priced better. And at face value, not paying the taxes saves you money, and that that savings is passed on to the consumer. I think we have every reason to believe that the experiment of regulated cannabis in California will fail without government intervention.
Skodzinski: What about rural farmers right now? Are they having a harder time due to impacts from the COVID-19 pandemic?
Allen: You know, the timing of this isn't so bad. Most of those rural farmers are single-season, outdoor, maybe two-season, mixed-light folks there. This isn't harvest season. This is when those folks are usually spending a bunch of money with no revenue anyway. Anyone who's been succeeding in that space knows how to budget. When this could become really acute for them is if sales haven't picked up by the time there's harvest. There is a very thin margin and a very thin window where those growers need to generate some revenue pretty quickly after harvest or they miss their next planting season. And so far, we haven't crossed any of those thresholds. It’s planting season, which nobody's expecting to do many sales at this time of year anyway.
Honestly, if anything, I think the indoor growers that are paying a power bill every month have a much higher need for constant revenue, and they get behind a lot faster. So a two-month slow down on sales is probably going to hurt them more than it hurts somebody who's accustomed to budgeting for several months between revenue.
We do work with a handful of indoor growers …, and the feedback I'm getting from them is that … the indoor growers are going to have to turn the lights off if we don't see something [change]—which I think is probably going to happen in the next five years anyway. A lot of these things, like I said, I don't think are new circumstances. I think [the current situation] is expediting some of the failures that already existed in the marketplace.
Skodzinski: Is there anything you suggest that cannabis businesses everywhere do as far as pushing to gain federal support, whether on a regular basis or during the current crisis?
Allen: For folks in states with Republican senators, it has never been more important to establish a relationship with those senators. Obviously, it's always important to have strong relationships with your elected officials, 100%, but when we get down to the meat of the matter, Republican senators, the federal Senate, those are the folks that are going to block our progress.
I think we have the votes to add cannabis to the SBA programs in the House of Representatives. I expect that we will hear from Speaker Pelosi in the next few days to that effect. But we don't have the votes in the Senate, hands down, and the more inroads we can make with those Republican senators the better. Constituents in those States are absolutely the best people to build those relationships.
I think it's a great opportunity for the cannabis business community to, to reassess some of the divisions, to try to think more like a community and less like factions. I really do think we're going to need each other more than we ever have before on other side of this. And we've got some time now to try to ease into that.
So if there's any grudges folks are holding, let go of them, … find common ground. Don't focus on the differences, … focus on what brings us together. And we'll see what we get.
Skodzinski: What else?
Allen: Gosh, I mean, we're essential! (laughs) … I just wish everyone the best possible outcomes. I encourage everyone to take a deep breath, and stay grounded and focused. I do think we're going to need some external support, some government intervention, but I think if we stay grounded and we stay focused that we’ll get it, frankly. I think it's a good time to figure out how to best get organized. We’ve got a lot of work to do together in the next several months to make sure we recover.
*Editor’s Note: This interview has been edited for length.
Three lawsuits allege a cannabis entrepreneur defrauded investors by failing to pay back $1.2 million in loans.
Solace Holdings LLLP, Aether Gardens and Telloni Holdings Limited filed the lawsuits against entrepreneur Case Mandel and his companies Cannadips LLC and Trinidad Consulting LLC in the U.S. District Court for the District of Nevada, and state courts in Nevada and California.
The lawsuits allege that Telloni provided Mandel and Trinidad a loan of $500,000 in July 2018 and, in early 2019, increased the loan amount to Mandel and his businesses to $1 million. Then, around July 2019, the plaintiffs offered the defendants a “Bridge Loan” of $200,000.
“Under the terms of the Bridge Loan, the parties agreed that the $200,000.00 would be paid-back-in-full after three months with all accrued and unpaid interest,” the lawsuit filed in California reads.
Paul D. Turner, an attorney representing the plaintiffs, said the borrowed money with interest was due in October 2019, but his side didn’t file its first lawsuit until February 2020.
“We were trying to explore a possibility of figuring out what had gone so horribly wrong [before we filed the lawsuit]. Is there a fix, can we get paid, can we protect this multimillion-dollar investment? We went into that phase,” Turner said. “Obviously, we filed not one, not two, but three lawsuits under various contracts because we came to the conclusion that this investment could just fall apart, and we would be left holding a bag with nothing in it.”
Trinidad and Cannadips first entered into an agreement with Solace around May 2018, according to court records. The deal allowed Solace, a Nevada-based cultivator and producer, to manufacture and distribute Cannadips, a dip product containing cannabidiol (CBD), throughout Nevada, Turner said.
But the two sides make starkly different claims on if the plaintiffs owed the defendants royalties from sales, according to court records.
According to a motion filed by the defense on April 1 in federal court, the defense claims that, “In exchange for receiving these valuable licensing rights [to produce and sell CBD and THC products], Solace was contractually obligated – among other things – to provide Defendants with a monthly royalty report and pay royalties in accordance with the Agreement’s terms.”
In responding to this to Cannabis Dispensary, Turner said, “There's no obligation to do that under the contract. It was cash for cash, not some kind of convoluted offset theory.”
On April 1, the defense filed “to dismiss or stay the case pending mediation,” according to the federal court docket.
For his part, Mandel declined CD’s request for an on-the-record phone interview but provided the site with the following statement: “This is a matter in litigation and we are more than confident in our position. We intend to try the case in court and not throughout the media. There was never any fraudulent conduct. Their efforts to portray me as some sort of conman are unfounded and there is absolutely no evidence to support such a claim. At this time, any statement beyond this would be unproductive. We are hoping that we can bring this to a fair conclusion in a professional and ethical way. The truth will speak for itself.”
Legislative Map
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