Coronavirus and Cannabis: California Regulatory Updates

By Sahar Ayinehsazian

Mar 21, 2020

This VS Insight is dedicated to updates regarding the coronavirus and cannabis in California. For updates on other states or coronavirus-related issues, see our main post on the subject, "Coronavirus and Cannabis: Monitoring the Impact."

Cannabis regulations are in flux across the U.S. as officials at every level of government work to contain the new coronavirus (COVID-19). Vicente Sederberg is closely monitoring the situation, and we are communicating with regulators to understand how these local, state and federal responses may affect cannabis business operators, medical patients, and other cannabis consumers. We are committed to doing everything we can to keep our clients and the public updated as we learn of new developments, but please note this is an extremely fluid situation and there is a lot we do not know. This VS Insights post is for informational purposes only and not for the purpose of providing legal or tax advice. We strongly encourage you to contact an attorney if you are seeking advice regarding any specific legal or tax issue.


LATEST UPDATES

March 30, 2020

  • Governor Newsom signed an executive order that, among other things:

    • Provides tax extensions for businesses: The order allows the California Department of Tax and Fee Administration (CDTFA) to offer a 90-day extension for tax returns and tax payments for all businesses filing a return for less than $1 million in taxes. That means small businesses will have until the end of July to file their first-quarter returns. The order also extends the statute of limitations to file a claim for refund by 60 days to accommodate tax and fee payers.

    • Eases certain corporate formality requirements: The order provides, “For any shareholder meetings that already have been scheduled, or must occur before June 30, 2020, the requirements in Corporations Code sections 20 and 600 to request and receive the consent of shareholders for meetings of shareholders to be held by electronic transmission or by electronic video screen communication are hereby suspended, and the requirement in Corporations Code section 601 to provide written notice of such meetings is hereby suspended, to the extent that a corporation has provided notice to its shareholders that a meeting will occur at a physical location and subsequently provides notice by a press release, website posting and other means reasonably designed to inform shareholders that the meeting will occur by electronic transmission or by electronic video screen communication.”

March 21, 2020

  • The Bureau of Cannabis Control issued a notice clarifying that “because cannabis is an essential medicine for may residents, licensees may continue to operate at this time so long as their operations comply with local rules and regulations.” This notice follows Governor Newsom’s March 19th “Stay at Home” order, which requires, in part, all non-essential businesses to halt operations until further notice. The Bureau’s notice further specifies that licensee’s continuing operations must adopt social distancing and anti-congregation measures and follow the CDC’s Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease. VS’s social distancing guidelines for businesses can be found here.

  • The California Bureau of Cannabis Control continues to be very responsive to licensees’ requests for temporary relief from various regulations, including permitting temporary “curbside pickups,” as long as such pickups occur under video surveillance or are monitored by the retailer’s security personnel. 

March 20, 2020

  • The California Department of Public Health designated a list of “Essential Critical Infrastructure Workers” who may continue to work in light of Governor Newsom’s March 19th order. This list includes cannabis retailers as a part of the “Essential Workforce.”

March 19, 2020

  • Gov. Gavin Newsom executed a statewide “Stay at Home” order directing all residents to stay at home except as needed to maintain continuity of operations of federally identified critical infrastructure sectors until further notice. This order does not specifically touch on cannabis operations.

  • Los Angeles County executed a “Safer at Home” order directing all residents to stay inside their homes, limiting all movement outside of their homes to what is absolutely necessary for essential needs, and for all non-essential businesses to halt operations until April 17. The order deems “Healthcare Operations” to be a category of essential businesses that may continue operations. Included within the definition of Healthcare Operations are “cannabis dispensaries with a medicinal cannabis license.” The order does not specify whether cannabis retailers with both medicinal and adult-use cannabis licenses must stop adult-use sales.

March 18, 2020

  • The California Bureau of Cannabis Control has been very responsive to licensees’ requests for temporary relief from various regulations, including permitting temporary “curbside pickups,” as long as such pickups occur under video surveillance or are monitored by the retailer’s security personnel. The Bureau is expected to distribute additional guidelines for operations in light of COVID-19.

March 17, 2020

  • Orange County and San Diego County issued emergency orders directing all residents to stay inside their homes and all non-essential businesses to halt operations. While the orders specify “Healthcare Operations” may continue to operate, they do not specifically address cannabis businesses.

  • Santa Cruz County has clarified that cannabis retailers are defined as an essential business and may remain open, with retail sales permitted solely via delivery (per a licensee’s licensing restrictions) and parking lot pickups.

  • San Francisco’s Department of Public Health clarified that “cannabis is an essential medicine for many San Francisco residents [and that] dispensaries can continue to operate as essential businesses during this time, while practicing social distancing and other public health recommendations.”

  • Santa Clara counsel James Williams has stated that dispensaries may remain open as essential businesses “for medical purposes, not recreational.”

  • Los Angeles Mayor Eric Garcetti ordered a moratorium on commercial evictions of tenants unable to pay rent due to circumstances related to the novel coronavirus (COVID-19) pandemic. According to the Mayor’s order on commercial evictions, which will be in place until April 19 (pursuant to an extension and subject to further extensions), “No landlord shall evict a commercial tenant in the City of Los Angeles during this local emergency period if the tenant is able to show an inability to pay rent due to circumstances related to the COVID-19 pandemic. These circumstances include loss of business income due to a COVID-19 related workplace closure, child care expenditures due to school closures, health care expenses related to being ill with COVID-19 or caring for a member of the tenant’s household who is ill with COVID-19, or reasonable expenditures that stem from government-ordered emergency measures.”  A provision in the order gives eligible tenants up to three months following the expiration of the local emergency period to repay any back due rent.

March 16, 2020

March 15, 2020

  • Los Angeles Mayor Eric Garcetti instituted an order requiring, in part, the closure of all movie theaters, live performance venues, bowling alleys, arcades and bars and nightclubs in the City of Los Angeles that do not serve food. Restaurants and bars and nightclubs that serve food may continue to operate solely for take-out and delivery purposes. The order will remain in effect until March 31. It is unclear whether this order will affect the city’s cannabis businesses.

March 12, 2020

  • Gov. Gavin Newsom issued an executive order to further enhance California’s ability to respond to COVID-19. It includes the following relief for Californians impacted by COVID-19:

    • Tax Relief: The California Department of Tax and Fee Administration (CDTFA) announced that taxpayers may request assistance—which includes extensions for filing returns and making payments, and relief from interest and penalties—by contacting the CDTFA and through the CDTFA’s online services.

    • Commercial Mortgages: Governor Newsom’s executive order calls on financial institutions holding commercial mortgages to implement an immediate moratorium on foreclosures and related evictions when the foreclosure or foreclosure-related eviction arises out of a substantial decrease in business income.

    • Labor Guidance for Employers and Workers: The California Department of Public Health (CDPH) issued a COVID-19 Resources for Employers and Workers resource guide for both employers and workers on their respective rights and obligations, in addition to resources for workers in need of support services.

    • Utilities: Governor Newsom’s executive order calls on utility providers covering electricity, gas, water, sewer, internet, landline telephone, and cell phone service to place moratoriums on service disconnections and late fees for non-payment. The California Public Utilities Commission (CPUC) announced in a March 17, 2020, press release that it would halt all customer disconnections for non-payment for all energy, water, sewer and communication companies under CPUC jurisdiction.