Pot’s gone from illegal to essential.
Late last week, California’s public health officer followed up on the governor’s stay-at-home order by clarifying the types of employees who are critical to society while the novel coronavirus rages. Included on the list: cannabis retail workers.
Before the passage of Proposition 64, some of those same people might have been charged with a crime.
San Diego is now deferring to California for guidance on marijuana matters, and the state is intent on helping those businesses survive while mitigating the spread of COVID-19. Local dispensaries have begun applying for and quickly receiving permission to let customers order online and pick up supplies from a nearby curb.
Normally this kind of thing isn’t allowed — the state’s special license is only good for 30 days at a time — but it’s helping dispensaries minimize crowds and limit the time spent at the dispensary. In some places, one never needs to leave the car.
Though marijuana was deemed essential, this is a crucial moment for San Diego’s budding industry, and there are real concerns that the coronavirus will undo the efforts made by law enforcement to keep the black market down.
The state’s willingness to carve out a special license for curbside pickup was good news for dispensary owners who, like many other businesspeople in the region, are experiencing extreme uncertainty and volatility. Congress is preparing a massive stimulus package for the economy, but dispensaries are unlikely to see a direct benefit because the U.S. government still considers marijuana illegal.
Marijuana sales across California skyrocketed last week — some dispensaries reported turning people away to avoid overcrowding — and are trending downward this week. A similar trend is playing out in Colorado and Washington. In San Diego, it’s been widely interpreted as a sign that the pleas from local and state officials to stay home are working and that people stocked up ahead of time.
Will Senn, the founder of Urbn Leaf, said his dispensaries are seeing a lot of repeat customers and a few new ones who live in the region.
“It’s almost all existing customers,” he said. “The tourist market is gone. There’s nobody traveling.”
It’s too soon to say what the effect will be on San Diego’s bottom line, but the city was looking forward to increased marijuana tax revenue for its budget. Each year since legalization went into effect the dollar figure has gone up, thanks to the city’s stepped-up tax collection efforts and an increase in the sales tax amount. The Union-Tribune reported last fall that the city was projecting to bring in $12 million by July, an approximately 50 percent increase from the prior fiscal year.
“The city is our partner,” Senn said. “Our revenue drops, the city’s tax revenue drops in direct correlation. We’re gonna play it out and see how it goes. We’re in scary times.”
As dispensaries make the switch to online purchases and deliveries, there’s a chance that consumers will gravitate toward the black market, which is cheaper because it is untaxed, but the products are untested and uncertified. It’s also possible that people don’t know the difference. Again, the state is offering a tool. Anyone who’s unsure if they’re buying from a legal or illegal operator just has to run a search on the Bureau of Cannabis Control website.
In recent years, San Diego has stepped up its enforcement of the black market to a degree not seen elsewhere in California. Rather than go after individual operators who hide behind various companies and drag out the process in court, the city decided to target property owners to much success. The city attorney’s office estimates that dozens of operations have been shut down over the last 18 months on charges related to the possession and transportation of marijuana for sale.
Other cities, like Chula Vista, have struggled to root out the black market because they’ve targeted the most visible employees — security guards, budtenders, sign spinners — instead of the funders and profiteers.
“San Diego has been amazing at really limiting, if not closing down, the black market,” said Doug Gans, who co-owns Torrey Holistics. “They’ve been aggressive and great on it and we’ve helped them.”
Two years ago, California regulators sent warning letters to 375 illegal operators in San Diego County, many of them delivery services that were advertising online without an address. At the time, there were 24 legal operators. For every seller sanctioned by the city and state, there were about 15 who weren’t.
Since then, platforms like Weedmaps have vowed to stop letting illegal operators advertise.
The state doesn’t have new numbers readily available, but the United Medical Marijuana Coalition, a trade group representing the legal dispensaries in San Diego, estimates that at least 50 percent of all marijuana transactions stem from an illegal operator.
The coronavirus could upend that ratio. Not every licensed dispensary in San Diego has a delivery service, so some are quickly trying to get that part of the business up and running.
None of the dispensary owners I spoke to reported any layoffs. Some, in fact, said they need every worker they can get, now more than ever.
The curbside pickups happening at Urbn Leaf, Torrey Holistics and elsewhere are intended not just to prevent the spread of the coronavirus, but to protect employees who are at the center of high-volume transactions.
In the meantime, the legal dispensaries have been limiting the number of people they let inside the shop to 10 and enforcing social distancing policies in lobbies. Spencer Andrews, the public affairs director at March and Ash, said his company is offering lunches and dinners in the breakroom, handing out gloves, masks and hand sanitizer, and disinfecting the store on an hourly basis to limit exposure for workers while on the job.
“They’re on the frontlines,” he said. “They’re the ones interacting with customers, so we want to keep them safe.”