In the tumultuous weeks and months of last year, a nine-letter word emerged that fundamentally changed the country’s legal marijuana industry: “essential”.
It started about a week after the World Health Organization declared the COVID-19 outbreak a global pandemic on March 11.
At that point, California announced a statewide lockdown, followed by Illinois.
Both states described marijuana operators – in addition to pharmacies, supermarkets and liquor stores – as “indispensable”, and these companies were allowed to remain open.
California and Illinois were soon followed by dozens of other states declaring marijuana operators “essential businesses.”
In total, nearly 30 states with functioning marijuana markets – as well as the District of Columbia and Puerto Rico – believed marijuana business was essential.
The onslaught of “essential” labels in the early weeks of the pandemic turned out to be one of the most significant moments in the timeline of the country’s legal marijuana industry – and arguably helped create new state-legal MJ markets projected to grow billions of dollars in sales to generate.
By making marijuana “essential,” states are putting the cannabis industry in the same category as pharmacies, hospitals, and other sources of legitimate medicine.
In short, cannabis has moved from an alternative treatment to an essential medicine, which has greatly improved its credibility. State regulators and health professionals approved this upgrade.
In addition, states put marijuana on the same footing as a nationally legal industry, alcohol.
“The hope was that the ‘essential’ label would get more recognition for keeping cannabis here, that there would be a strong consumer preference for it,” said Steve Hawkins, executive director of the Washington DC-based Marijuana Policy Project and CEO of the US Cannabis Council.
“I think that was confirmed by the amount of usage during this pandemic period.”
Liesl Bernard, CEO of the Cannabiz team, a marijuana-focused recruitment company in San Diego, agreed.
“The fact that you could not go to your hairdresser but to a pharmacy opened a lot of people’s eyes that this is an industry that will stay here,” said Bernard.
She added that the “essential” designation has sparked greater interest among professionals in working in the cannabis industry, especially at a time when many of those professionals have lost jobs in other industries.
“They see that it is ‘essential’, they see that retail sales are increasing, and they see that it is the next big industry,” said Bernard.
The term “substantial” sparked other important changes in the marijuana industry:
- It further destigmatized the drug among consumers.
- In many states, regulators have mandated business-friendly security measures such as roadside collection and home delivery.
- State health officials gave doctors the green light to write recommendations for medical marijuana through online appointments, also known as telemedicine. This step made it easier for patients to obtain medical cards.
These factors helped state legal marijuana markets across the country break sales records in 2020.
Industry watchers also say the “essential” label has driven marijuana legalization in seven states – five through electoral initiative and two through lawmakers. It has also increased the pace of reform at the federal level.
However, business owners and proponents have also found that the “essential” label has limitations.
Despite all the positive changes among consumers and low-income state officials, serious obstacles remain – including a lack of access to banks, a federal ban and skepticism towards medical facilities.
In short, the term “material” has not affected everyone empowered to remove these barriers.
By the numbers
According to an analysis by the Marijuana Policy Project of legal marijuana markets in 32 states and Washington DC, all but one – the Massachusetts recreational market – were allowed to stay open during state-mandated stay-at-home orders.
The Massachusetts medical market was declared “essential” and continued to operate, while the recreational market was allowed to resume sales on May 25th.
Of those 33 markets, 28 marijuana companies explicitly declared “material” (including the Massachusetts MMJ market) and three states had bans but allowed cannabis companies to continue their operations without expressly declaring them “material” according to the MPP mark.
Arkansas and North Dakota have not instituted statewide bans, so the “essential” designation has been controversial.
Iowa imposed lockdowns on some areas, but still distinguished between “material” and “non-material” companies, with cannabis companies classified as “material”.
Of those 33 markets, 18 allowed home delivery of marijuana before COVID-19, five added delivery in response to the pandemic, and 10 made no delivery an option, according to MPP.
Of these 33 markets, 10 allowed a roadside pickup and / or drive through prior to the pandemic and 19 allowed a roadside response and / or drive through in response. In four states, curb or drive-through pickup weren’t an option.
And from these 33 markets:
- 19 allowed MMJ doctor appointments through telemedicine before COVID-19 (10 allowed telemedicine for first appointments and card renewals; nine allowed telemedicine only for extensions).
- 11 allowed MMJ doctor’s appointments via telemedicine after the start of the pandemic.
- Arizona did not allow MMJ appointments through telemedicine, while there was no information for Iowa and New Jersey.
Credibility with consumers
The “essential” label had the greatest impact on consumers, as evidenced by the increase in sales cannabis experienced during the pandemic.
“People are finally realizing that for what it is. It’s medicine, ”said Gary Santo, CEO of Tilt Holdings, a Phoenix-based multi-tier operator that also owns a major vaporizer maker, Jupiter Research.
“You can look at the demographics and see how many people are approaching the plant with something in mind. having joint pain, anxiety, trying to treat a disease. And I think it really became clear how important this was, especially during the pandemic. … people see it a little more like medicine now. “
Referring to a marijuana legalization bill passed in the US House of Representatives last year, MPP’s Hawkins said, “The ‘essential’ label has helped legitimize cannabis as an important part not only of the state economy, but also for Incredibly important to patients and recreational consumers.
“And that backdrop certainly helped define the effort we saw last year with the passage of the MORE Act in Congress.”
Help at the state and federal level
Hawkins and other observers say the “essential” label was a factor last November when voters in five states legalized the recreational and medical marijuana market through election initiatives.
Together, these states could have annual sales of more than $ 2.5 billion in medicinal and recreational cannabis by 2024.
Separately, Vermont lawmakers approved a recreational marijuana program last October. This program is expected to generate annual sales of approximately $ 250 million by 2025.
Virginia lawmakers followed suit last month, approving an adult use program that could generate nearly $ 1.5 billion in annual sales within five years of scheduled launch on Jan. 1, 2024.
At the federal level, the label “substantial” helped move the needle for marijuana reform.
“During the presidential debates, at least on the Democratic side, there was a very heated discussion about the legalization of cannabis,” noted Hawkins. “That didn’t happen in a vacuum.
“It was underlined that cannabis was seen as an essential commodity in the midst of a pandemic. And that was reflected in the fact that every presidential candidate had something to say about cannabis, with most believing it should be legalized. “
While the “essential” label has been persuasive to consumers, state regulators, and some members of Congress, it has so far failed to convince federal officials to end the government’s marijuana ban.
The “essential” designation has not yet prompted Congress to take more moderate steps, including:
- Banking reform for cannabis companies.
- Marijuana industry’s access to the federal government’s paycheck protection program, which aims to help small businesses keep workers busy during the COVID-19 pandemic.
- Allow Veterans Affairs physicians to recommend medicinal cannabis to veterans.
The “essential” designation has not changed the opinion of the major medical institutions either.
In December, the American Medical Association sent a letter to House Speaker Nancy Pelosi arguing against the MORE bill despite the medical group’s support for bills that would allow greater medical research into cannabis.
“It’s always been a bit of a disappointment for me because when you are classified as ‘essential’ and still can’t qualify for things that others in that category can qualify for, it has resulted in a bit of a disappointment in terms of dichotomy common sense, ”said Geoff Bacino, a former federal banking regulator and now a Washington DC-based advisor whose clients include marijuana companies.
While the “essential” label has made it easier for state politicians to advocate legalization or liberalization of regulations, Bacino is less certain that this has changed the mind of Congress.
“It might help them feel a little less reluctant, but on the whole I find that most of the members, especially those who have been in the last few sessions of Congress, are pretty much their own way,” said Bacino.
“The question is, can you just get a bill on the floor that gets people to vote? I’m not sure the label will change anyone’s mind, but it can make someone a little more comfortable with their decision. “
Omar Sacirbey can be contacted at [email protected].