Coronavirus and Cannabis: New York Regulatory Updates

By Elliot Choi, Jennifer Cabrera, and Jacob Setton

Mar 24, 2020

This VS Insight is dedicated to updates regarding the coronavirus and cannabis in New York. 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 28, 2020

  • The U.S. Centers for Disease Control and Prevention issued a Domestic Travel Advisory for New York, New Jersey, and Connecticut, urging residents of those states to refrain from non-essential domestic travel. The advisory does not apply to employees of critical infrastructure industries, including but not limited to trucking, public health professionals, financial services, and food supply.  In addition, the Governors of New York, New Jersey, and Connecticut have full discretion to implement the advisory.

March 24, 2020

  • The White House Coronavirus Taskforce advised people who have been in or passed through New York City, to place themselves into a 14-day quarantine once they have left the city.

  • Adult-Use Legalization: It remains unclear how COVID-19 will impact New York’s efforts to legalize adult use in 2020. At the beginning of this year, Governor Cuomo in his State of the State indicated that adult use legalization was a priority and that he intended to include adult use legalization in state’s budget. Despite the COVID-19 pandemic, Governor Cuomo has reiterated that adult use legalization remains a priority and he hopes its passage will be included in the state’s budget, which is subject to an April 1 deadline. However, members of the New York State Legislature have indicated that they are focused on the COVID-19 outbreak and the state’s response and the budget may exclude items such as adult use legalization. If adult use legalization is not included in the state budget, it remains possible it could be passed as stand-alone legislation later this year. Many industry analysts and observers are speculating that shortfalls in tax receipts for this year may provide additional motivation for states to legalize adult use for the expected increase in tax revenue.

March 23, 2020

  • Governor Cuomo signed Executive Order No. 202.10, which continued the temporary suspension and modification of laws relating to the Disaster Emergency issued on March 7 (see below). The Executive Order significantly loosened the restrictions on health care professionals to ensure that they have the bed capacity, supplies, and providers to treat COVID-19 patients. In addition, the Executive Order also required that the non-essential gatherings of individuals of any size for any reason to be canceled or postponed. 

March 21, 2020

  • Governor Cuomo signed Executive Order No. 202.9 that, among other things:

    • modified the Banking Law to deem as “unsafe and unsound” business practice for any bank to refuse to grant a forbearance to any person or business who has a financial hardship as a result of the COVID-19 pandemic;

    • directed the Superintendent of the Department of Financial Services to promulgate emergency regulations to ensure under “reasonable and prudent circumstances” an opportunity for forbearance of mortgage payments to any person or entity facing financial hardship as a result of the COVID-19 pandemic; and

    • empowers the Superintendent of the Department of Financial Services to promulgate emergency regulations to direct that ATM fees, overdraft fees and credit card late fees, may be restricted or modified.

March 20, 2020

  • Governor Cuomo announced that he signed Executive Order No. 202.8, mandating that all non-essential workers to stay home beginning on March 22. Businesses (but not individuals) that do not comply with the executive order will be subject to civil fines and mandatory closures. In addition, New York will implement a 90-day moratorium on evictions for residential and commercial tenants.

    • Per The New York Department of Health guidance issued March 17 (see below), registered organizations are considered medical providers and therefore essential businesses in New York and would not be subject to the restrictions.

March 19, 2020

  • The United States Small Business Administration approved a disaster declaration for the State of New York in connection with COVID-19 that makes certain small businesses and nonprofits eligible for low-interest loans.

  • However, the United States Small Business Administration has stated that cannabis businesses are not eligible for SBA loans even if the business is legal under state and local laws.

  • Governor Cuomo signed Executive Order No. 202.7, which authorized the closure of all personal care services and requiring all non-essential businesses to reduce in-person workforce by 75%.

March 18, 2020

  • Governor Cuomo signed Executive Order No. 202.5, authorizing the closing of all common indoor portions of retail shopping malls (essential businesses with separate external entrances may remain open) and all places of public amusement, whether indoors or outdoors effective March 19 at 8 PM.

  • Governor Cuomo signed Executive Order No. 202.6, which, among other items, requires all non-essential businesses to reduce in-person workforce by 50%.

  • Governor Cuomo also announced that Pennsylvania has joined New York, New Jersey, and Connecticut in establishing a regional uniform approach to social distancing. It is unclear if the uniform approach will extend to each state deeming medical cannabis as an essential business.

  • Governor Cuomo signed a bill guaranteeing paid leave for New Yorkers under mandatory or precautionary quarantines due to COVID-19. We will provide additional information regarding this bill once it becomes available.

March 17, 2020

  • The New York Department of Health (the “Department”) issued Novel Coronavirus Guidance for Registered Organizations. The key aspects include:

    • Registered organizations are considered medical providers and therefore essential businesses in New York. This means if New York imposes a shut-down of non-essential businesses, registered organizations will be allowed to continue operations.

    • Registered organizations that have been approved to deliver medical cannabis will be permitted to deliver statewide until April 16, 2020. The Department is also asking such registered organizations to encourage patients to utilize delivery services.

    • The Department included guidance for delivery drivers, which includes wearing masks and gloves, sanitizing hands after each delivery, encouraging patients to use their own pens or sanitizing pens after each use, or using alternate forms (such as a phone call, text or email) to confirm receipt of medical cannabis products.

    • Registered organizations may also dispense medical cannabis products at the door of dispensing facilities provided they maintain compliance with all current laws, including dispensing on camera, and validating registry ID cards.

    • To avoid overcrowding, registered organizations are asked to have patients schedule appoint if the registered organization is equipped to do so.

    • Registered organizations also must promptly notify the Department of existing or anticipated disruptions to the registered organization’s supply chain or ability to manufacture medical cannabis products. 

    • The guidance also includes that registered organizations must have a plan in place if staff test positive or may have been exposed to Covid-19 and that registered organizations must increase sanitation of the registered organization’s facilities.

March 16, 2020

  • Governor Cuomo signed Executive Order No. 202.3 and Executive Order No. 202.4, among other things, limiting restaurants and bars to off-premises consumption and authorizing the closure of all casinos, gym, fitness centers or classes, and movie theaters effective March 16 at 8:00 PM. In addition, local and all state non-essential personnel are not required to physically report for work, and all state schools were authorized to close for two weeks ending on April 1.

  • New York City Mayor Bill de Blasio signed Emergency Executive Order No. 100, among other things, limiting restaurants, bars and cafes to food take-out and delivery. In addition, entertainment venues, including nightclubs, movie theaters, small theater houses, concert venues and commercial gyms must all close effective March 16 at 8:00 PM.

March 15, 2020

  • Governor Cuomo announced that New York City schools would close the following day through April 20 and public schools in Westchester, Suffolk, and Nassau will close on March 16 and stay closed for two weeks

  • New York City Mayor Bill de Blasio signed Emergency Executive Order No. 99, prohibiting gatherings in excess of 500 people and requiring gatherings of less than 500 people to operate at no greater than 50% of occupancy and seating capacity.

  • New York City Mayor Bill de Blasio also announced that all city schools will close starting March 16.

March 14, 2020

  • Governor Cuomo announced the State Department of Financial Services will require insurance companies to waive co-pays for telehealth visits to encourage New Yorkers to seek medical attention from their homes rather than visit a hospital or doctor's office.

  • State Department of Financial Services previously clarified that patient evaluation and certification for medical cannabis is a Medicaid reimbursable service. We are currently seeking clarification from the State on whether the co-pay waiver applies to telehealth visits related to medical cannabis.

March 13, 2020

  • New York City, in partnership with the state, placed occupancy and spatial limits on New York City’s large venues and cancel all existing and future events exceeding a capacity of over 500 people until further notice, with restrictions put in place on establishments with a capacity under 500 people.

March 12, 2020

  • Governor Cuomo signed Executive Order No. 202.1, suspending certain laws in response to COVID-19 and also prohibiting gatherings above 500 people and requiring gatherings of less than 500 people to operate at no greater than 50% of occupancy and seating capacity. In addition, the executive order also included a waiver of the seven day waiting period before unemployment benefits can be collected.

  • New York City Mayor Bill de Blasio signed Emergency Executive Order No. 98, declaring a state of emergency within New York City. The declaration directs all city agency heads to take all appropriate and necessary steps to preserve public safety and health, and to render all required and available assistance to protect city residents.

March 10, 2020

  • Governor Cuomo accepted the recommendation of the State Health Commissioner for new emergency measures to contain the novel coronavirus cluster in New Rochelle. The protocols include closing schools, houses of worship, and other large gathering facilities within a one-mile radius in New Rochelle for a two-week period that is current scheduled to end on Wednesday, March 25th.

March 8, 2020

  • New York City Mayor Bill de Blasio announced that New York City will provide relief for eligible small businesses that experience a reduction in revenue because of COVID-19.
    • Small business with fewer than 5 employees and subject to other eligibility requirements can apply for a grant to cover up to 40% of payroll costs. Additional information about, and applications for, this grant program can be found here.

    • Businesses with fewer than 100 employees who have seen sales decreases of 25% or more may be eligible for zero-interest loans of up to $75,000 to help mitigate losses in profit. Applications are not currently available, but interested businesses can complete this survey to be notified when applications are available.

    • It appears that cannabis businesses would be eligible for these relief programs, although we are seeking confirmation.

March 7, 2020

  • Governor Cuomo signed Executive Order No. 202, declaring a state of emergency to help New York contain the spread of COVID-19. The state of emergency declaration allows, among other things:

    • Directs the implementation of the State Comprehensive Emergency Management Plan.

    • Authorizes all necessary state agencies to take appropriate action to assist local governments and individuals.

    • Provides a clear basis for price gouging and enforcement investigation.

    • Expedites the procurement of essential supplies.