Marijuana's big moment: Pot stores are essential businesses. Will legal weed go mainstream? – USA TODAY

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For legal marijuana businesses, April 20 is traditionally a big day for sales. This year, companies are reporting a decline in purchasing. (April 20) AP Domestic

DENVER – The marijuana industry embraces change.

Edible products and pre-rolled joints are out. Vape concentrates and loose “flower,” which can be packed into bongs or pipes or rolled into joints and provide more bang for the buck, are in. 

Stores are effectively closed. Instead, customers order online and pick up curbside, a major shift from when each buyer had to be personally verified by a licensed store worker. In California, stores have largely switched to an all-delivery model. 

The country’s burgeoning marijuana industry is working swiftly to adapt to customers’ needs as the coronavirus outbreak  debilitates the U.S. economy. Business owners are unable to access federal bailouts because the drug remains illegally nationally, and popular 4/20 events were canceled because of stay-at-home orders, so sellers are pushing for new ways to reach customers and persuade lawmakers that legal weed has become a crucial industry for many Americans. 

“This is cannabis’s moment to find its purpose and its voice,” said Julie Armstrong, CEO of Montana-based cannabis analytics firm Aurelius Data. “It was the opportunity we never saw coming.”

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The outbreak has brought new challenges for legal weed sellers. Social distancing required retailers to essentially abandon their carefully designed stores and switch to curbside and delivery services. Statewide shutdowns forced the cancellation of 4/20 celebrations, which are usually the highest-sales periods of the year, on the date around which much of the industry’s planting, harvesting and production are scheduled.

In New York, a major post on the road toward national legalization, officials set aside legalization efforts while they deal with the outbreak, which has hit the state harder than any other.

But coronavirus has also spurred many consumers to go on buying sprees to cope with the long dull days at home and anxiety over the nation’s mass layoffs and growing death toll. Regulators in many states declared cannabis shops essential businesses on par with groceries, gas and liquor.

It’s the “critical service” portion that has many cannabis advocates optimistic that the outbreak has become a once-in-a-lifetime opportunity to move further into the mainstream.

“It’s a really important point that we were deemed essential: In a sea of chaos, this was one of the biggest moments in our industry’s history,” said Morgan Paxhia, managing partner at California-based Poseidon Asset management, which invests in cannabis businesses.

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Store operators said it’s about time regulators began treating marijuana stores like comparable retailers. In Colorado, regulators even lett cannabis store workers get their mandatory state licenses remotely, instead of having to show up in person at the licensing office.

“It would have normally taken two to five years for lobbyists and legislation to catch up to where California is today,” said Christian Schenk, CEO of delivery company Driven Deliveries.

Industry experts said this could be the necessary push to persuade Congress to permit marijuana businesses to use banks like any other business, because cash could be a vector for spreading coronavirus. Banks are generally reluctant to let marijuana businesses get accounts for fear they’ll be targeted by prosecutors chasing drug traffickers.

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The Trump administration has remained silent on the role of marijuana during the national emergency, leaving states to decide how to proceed, so most have either maintained or even broadened access, via delivery and curbside service. Eleven states have legalized recreational marijuana, along with the District of Columbia, and 33 states permit some form of medical use.

Massachusetts is the only state limiting legalized pot shops to only medical users, shutting out recreational buyers. Gov. Charlie Baker argued – and a judge agreed – that keeping the shops closed to recreational buyers would help protect public health, a decision applauded by the anti-legalization group Smart Approaches to Marijuana. Some health experts said consuming marijuana and smoking it in particular could put the user at a greater risk from a coronavirus infection, since it attacks the lungs.

“While other industries are accepting closures as a part of what must be done to protect vulnerable populations, the marijuana industry has chosen to kick and scream at the prospect of even a momentary loss of profit,” said Kevin Sabet, the executive director of SAM, who worked for several presidents in the White House Office of National Drug Control Policy. “The actions taken by the industry should serve as a warning to other states considering marijuana commercialization: This industry will do everything in its power to try and bend leaders to do its wishes.”

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About 243,000 full-time-equivalent employees worked in the legal marijuana industry across the USA as of January, according to Leafly, an online directory of cannabis retailers. That’s up 15% in a single year.

In comparison, the coal mining industry employs about 50,000, according to federal statistics.

Consumers drive that growth. 

Paul Hartje, the consumer experience director for Denver dispensary Seed & Smith, said business rocketed 15%-20% as the stay-at-home orders rolled out but settled down to be about 5% above normal.

“People are still stockpiling,” he said.

Part of that may have been in preparation for 4/20 celebrations. Denver has historically been the site of the biggest 4/20 each year, but city officials asked celebrants to stay home. In response, dispensaries organized Zoom videoconferences complete with live music to help mark the occasion.

That doesn’t mean cannabis sellers have a lock on the market. 

One industry expert said he closely watches sales because price-conscious consumers may shift away from legal stores and start buying cheaper cannabis from black-market dealers who don’t have to pay taxes or get their products tested as a state lab. They might also, he said, start growing their own.

“People are going to continue to be bored, but that doesn’t mean they’re going to be purchasing from the legal market if the price is lower elsewhere,” said Matt Karnes with GreenWave Advisors, a cannabis analysis firm. “It really comes down to price and how competitive it all is. As unemployment rises and times become tougher for everybody, if people aren’t working, they may think it’s time to grow my own stuff, and maybe I’ll sell it on the side.”

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