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Michigan and Illinois Impose Stay-at-Home Orders – Implications for Cannabis Businesses

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Michigan and Illinois Impose Stay-at-Home Orders – Implications for Cannabis Businesses

Michigan

On March 23, 2020, Michigan Governor Gretchen Whitmer joined several other states in addressing the coronavirus outbreak by issuing an executive order (the “Michigan Order”) ordering individuals to stay at home, subject to certain exceptions. To this end, the Michigan Order requires all businesses to temporarily suspend all operations to the extent the business requires “workers to leave their homes or places of residence, except to the extent that those workers are necessary to sustain or protect life or to conduct minimum basic operations.” Minimum basic operations include the protection of inventory, and products, obviously a significant concern for growers.

Shortly after the Michigan Order was issued, the Marijuana Regulatory Agency (MRA) released a bulletin stating that all licensed marijuana businesses, both medical and adult-use, may continue to operate at this time. Nonetheless, the Michigan Order and MRA guidance have several significant implications for Michigan’s marijuana industry.

First, while all licensed medical and adult-use marijuana businesses may continue operating, provisioning centers and retailers are only allowed to sell product curb-side or via home delivery. In-store sales are prohibited.

Second, staffing at all facilities must be reduced to a minimum. Pursuant to the Michigan Order, marijuana businesses must designate “workers necessary to conduct minimum business operations”, i.e. employees whose in-person presence is strictly necessary to allow the business or operation “to cover supplies and provide services and to maintain the value of inventory in general.” Such workers also include those responsible for ensuring security, processing transactions (including payroll and employee benefits), and facilitating the ability of other workers to work remotely. Businesses may identify and designate these employees orally until March 31, 2020, after which they must do so in writing.

Third, all marijuana businesses must take steps to protect the health and safety of employees and customers. This includes keeping employees at least six feet from one another, and following mitigation measures recommended by the Centers for Disease Control.

Finally, there appear to be no exceptions for construction work, outside of maintenance and repairs necessary for safety, sanitation, and essential operation. Thus, facilities currently under construction may therefore need to stop construction until the Michigan Order is lifted.

The Michigan Order goes into effect at 12:01 a.m. March 24, 2020, and is set to expire at 11:59 p.m. on April 13, 2020, although it very well could be extended or modified.

Although the Michigan Order resolves many questions that have arisen over the last few days of this highly fluid situation, it does leave some questions unanswered:

  • Are marijuana businesses within the definition of “critical infrastructure businesses?”  That seems to be the case and, if so, under the Michigan Order, marijuana businesses may also designate other businesses to remain open if they are necessary to facilitate the work of the marijuana business’s workers.  Businesses that abuse this exception are subject to penalties.
  • Does the extension of “prequalification status” issued last week extend to allowing testing labs additional time to receive accreditation?
  • Michigan Treasury has extended the time for payment of sales taxes. Will a similar extension be allowed for marijuana excise tax?
  • Some provisioning centers/retailers will decide to close. Will MRA allow them to transfer inventory to other commonly-owned facilities, or does it need to stay at the shuttered business?
  • Can allowance be made for some construction to continue, particularly for testing labs?

Illinois

Illinois imposed a stay-at-home order (the “Illinois Order”) over the past weekend. Under the Illinois Order, all non-essential businesses must cease operation while the order is in place, which at this time means until April 7, 2020.

The Illinois Order, however, expressly exempts licensed medical and adult-use cannabis dispensaries and cultivation centers. Cannabis businesses that remain open are required to do so at minimum basic operations (i.e. to maintain the value of the business’s inventory, maintain building and equipment, ensure security, process benefits and payroll). Businesses must also comply with social distancing requirements such as maintaining six foot buffers for employees and customers, making hand sanitizer readily available, implementing separate operating hours for vulnerable populations, and providing information on whether a business is open and how to obtain services remotely.

As discussed in our previous post, Illinois medical dispensaries (but not adult-use dispensaries) may sell product curbside if they follow certain requirements, while home delivery remains prohibited.

Please stay tuned as we obtain further guidance from state government and the coronavirus’s impact on the marijuana industry. For more generalized information, visit Dykema’s COVID-19 Resource Center.