Yesterday at the close of business, the Washington State Liquor and Cannabis Board (LCB) emailed stakeholders an update on COVID-19. This update was in response to an earlier proclamation by Governor Jay Inslee which shut down restaurants, bars, coffee shops, and any other venues where people congregate to eat and drink. The proclamation also prohibits public venues where people congregate for entertainment, social, or recreational purposes, such as “theaters, bowling alleys, gyms, fitness centers, non-tribal card rooms, barbershops and hair/nail salons, tattoo parlors, pool halls, and other similar venues[.]”
The proclamation did not prohibit restaurants from providing, drive-through, take-out, and delivery services or shut down businesses like grocery stores, pharmacies, or convenience stores. However, all retail stores must “designate an employee or officer who must establish and implement social distancing and sanitation measures established by the United States Centers for Disease Control and Prevention or the Washington State Department of Health guidelines.”
The WSLCB’s guidance clarifies some points within Washington’s regulated marketplace. First, it clarifies that marijuana retailers are not required to close, so long as they designate an employee or officer to establish best practices in light of COVID-19. It’s reassuring to those businesses that wish to stay open to see this confirmation from the LCB. It also makes sense given that all products that are sold in a marijuana retail store are required to be contained within child-resistant packaging. That helps mitigate the risk of contamination of marijuana or marijuana products. These items are sealed long before they reach a retailer’s shelves and retailers should never be handling unpackaged marijuana products. The LCB guidance did not address producer/processors but they are generally not open to the public at all, meaning that the proclamation would not shut them down either.
Second, the LCB requires that all on-premises tasting rooms are to shut down. This is not really a problem for marijuana businesses in Washington because on-site consumption of marijuana at a licensed entity is not allowed. In fact, it’s a felony for any business to offer a physical location where the consumption of cannabis is encouraged or even tolerated. However, this is worth noting as it could impact what are known as “Vendor Days” were marijuana producer/processors head to retailers to promote certain products. Vendors will sometimes offer samples of edible products. These samples do not contain cannabis, but if the vendor is promoting an edible product it is common for the vendor to bring along edibles without any infused marijuana. Most clients that I have spoken to already have made the decision to cancel vendor days in the near-term. That is likely now mandatory.
Third, the LCB guidance states that the agency is identifying ways to help licensed businesses during this closure, specifically, curbside delivery. Washington law effectively bans the delivery of marijuana by requiring that sales take place in a licensed retail outlet. Medical patients can purchase marijuana for the purpose of home-growing cannabis directly from producers; but other than that exception, all marijuana sales must take place in a store. The LCB may be extending that zone slightly beyond the physical store. This would allow consumers to pre-order and then pick up and pay for their order within their cars. It’s very unlikely that the LCB could go any further, as allowing for commercial delivery would go beyond the scope of the agency’s powers, meaning the legislature would probably have to act before any type of commercial delivery is allowed. However, the LCB is also looking at other potential modifications to its current regulations to respond to this health crisis.
I don’t have any data on this, but I do know that I’m hearing from my clients that Washingtonians are flocking to marijuana retailers to stock up. I imagine this is because people are trying to find ways to pass the time indoors while the world goes on hold for COVID-19. For now, retailers are staying open.
I’m going to attempt to update this blog post through March 17, as the LCB may provide additional details throughout the day. I’ll also be tweeting out new information as it comes in.
UPDATE: As of an email sent at 4:57 PM, the LCB will allow curbside deliveries at retail cannabis stores. This does not allow for drive-thru windows. Usually, the WSLCB only allows sales to happen within a licensed premises. That means an enclosed area within a retail store. Now sales can take place outside of the storefront but within the licensee’s property line.
The first thing retailers should do is check their leases to determine what is included in their leasehold. That will help determine the property line. This is especially important for stores that share a parking lot, especially stores in strip malls or other shopping centers.
Retailers wishing to make curbside deliveries must also communicate with their employees about how this new system will work. Here are a few items worth covering:
- Sales to Minors. How will employees double, triple, quadruple check that no sales are made to minors? ID scanners may not function outside of the store so retailers should account for that and provide guidance as to how employees can check IDs. This is also true to scanning sales, which is required under the state’s traceability regulations.
- Organization. How will employees coordinate online sales to ensure that customers receive what they order? Remember, this new guidance does not allow for delivery. Consumers can reserve products online or by phone and then pay curbside. If possible, setting aside a few parking spots for pick-up could keep this organized. Setting scheduled pick-up times could also keep things organized. If your unable to customize orders, consider offering a limited menu for curbside pick-up. That way certain items could be placed near the front of the store (but still behind a counter) for easier access. The most important thing is to plan to coordinate before “opening the floodgates.”
- Employee Safety. How you will protect your employees? Curbside sales make sense because it makes it possible for customers to avoid waiting inside with other customers. That’s the fundamental principle of social distancing. But employees are still interacting with customers, handling cash, and facing potential exposure even if that is taking place outside the store. Employees should take all the precautions they do in the store (gloves if available, hand sanitizer, staying at least 6 feet away from people when possible) but may not have as many opportunities to wash their hands due to being outside. In addition, this new policy essentially means that employees will be traveling to and from the store with marijuana and cash. That creates a safety risk that can’t be mitigated with good hygiene. Make sure employees are not running a curbside program on their own. Employees should be watching out for each other any time curbside deliveries are allowed. Ideally, security guards will be on the premises too. Deliveries should only be made in areas with adequate lighting. Employees should never carry large amounts of cash or cannabis. If you can’t ensure employee safety, don’t offer curbside delivery.
The LCB is also looking at deferring taxes, fees, and penalties but there is not a substantive update beyond that. We’ll keep watching out for further developments.
Below is the full section of this latest email that applies to marijuana licensees:
Guidance for Cannabis Licenses: Effective Immediately
- Applies to: Cannabis retailers, qualified medical patients with a valid authorization and recognition card and designated providers.
At this time, cannabis retailers are not required to close due to the coronavirus restrictions. However, to promote social distancing for qualified patients, the LCB is temporarily allowing cannabis retailers to sell to qualifying patients or their designated providers outside of their business but within the licensed property line. This is the same allowance provided to approved alcohol licensees during this time.
- Drive-through windows are not allowed;
- Qualified patients must be entered into the Dept. of Health medical marijuana authorization database and have a valid recognition card.
- Designated providers must be entered into the Dept. of Health medical marijuana authorization database and have a valid designated provider recognition card.
Update for Both Alcohol and Cannabis Licensees
Taxes, Fees and Penalties
Due to these requirement being contained in statute, the LCB does not have authority to waive taxes, fees and penalties. However, the LCB is actively exploring deferment of taxes and fees to ease the payment obligations on licensees that sell alcohol or cannabis. More on this soon.