The line at Theory Wellness when it first opened for recreational cannabis sales Jan. 11, 2019, stretched almost to Route 7. Photo: Terry Cowgill

With recreational cannabis shops closed, why do liquor stores remain open?

The problem is that recreational sales account for the vast majority of revenue for stores, and since medical marijuana is not taxed, revenues to the state and the municipalities that host the stores have dried up during the shutdown.

Great Barrington — The COVID-19 pandemic has disrupted the business community more severely than at any time since the Great Depression. Virtually everyone has been affected, so much so that the federal government has, for example, extended debt relief and loans through the Small Business Administration just to keep businesses afloat and help them ride out the economic storm caused by the widespread shutdown of nonessential businesses and services.

Nowhere has that disruption been felt more acutely than in the state’s cannabis industry. On March 23, Republican Gov. Charlie Baker issued an executive order closing all but “essential” businesses and services until April 7. That order has since been extended until at least Monday, May 4.

Click here to read Baker’s list of “essential services.” Liquor stores are permitted to remain open but recreational marijuana stores are not. Medical marijuana dispensaries, however, are on Baker’s list and remain open.

The problem is that recreational sales — known in the industry as “adult-use” — account for the vast majority of revenue for stores, and since medical marijuana is not taxed, revenues to the state and the municipalities that host the stores have dried up during the shutdown.

Combined revenues to the town Great Barrington, from the first six months of Theory Wellness’ sales after it opened Jan. 11, 2019, amounted to nearly $1 million. Revenues for the following three months amounted to almost $775,000, town finance director Susan Carmel has said.

Currently under construction, Rebelle, a planned recreational cannabis store, will occupy the space that housed the former Wild Birds Country Store on South Main Street (U.S. Route 7) across from Guido’s Fresh Marketplace in Great Barrington. Photo: Terry Cowgill

Statewide, sales of adult-use cannabis for 2019, the first complete year the stores have been open in Massachusetts, totaled more than $420 million and brought in about $71.4 million in taxes to the state during the calendar year.

With that in mind, Charlotte Hanna, co-owner of Rebelle, an adult-use store under construction on South Main Street, approached the selectboard at its Monday meeting, held via Zoom and teleconference, to ask board members to draft a letter of support to consider adult-use sales as an essential service.

“So I thought that the industry really could use the support of its municipalities and … possibly writing a letter, doing some kind of outreach to the governor, to ask him to reconsider cannabis as essential,” Hanna told the board.

Hanna is a co-owner of Community Growth Partners. She approached the board in February 2019, proposed to renovate an existing structure and operate her store, negotiated a host community agreement with the town and received a provisional license from the state Cannabis Control Commission in November 2019. Hanna was a vice president at Goldman Sachs, the Wall Street investment banking powerhouse, and worked at the firm for 11 years.

Hanna likened adult-use cannabis to over-the-counter medications found at pharmacies, which, as essential businesses, remain open under Baker’s executive order, as are medical marijuana dispensaries, which require the buyer to present a card prescribed by a physician.

Hanna also noted that, unlike almost all other businesses, the cannabis industry is not eligible for any federal relief during the economic downturn because marijuana remains classified as a Schedule I controlled substance under federal law.

According to NORML, a marijuana advocacy group, “It is estimated that the state-licensed cannabis industry employs more than 240,000 American workers, over four times the number of American workers as does the coal industry.”

Charlotte Hanna of Community Growth Partners. Photo: Terry Cowgill

“I just wanted to make the town aware of that,” Hanna said, adding that her Great Barrington project is still under construction. “It hasn’t impacted our timeline necessarily, but as we think about reopening economic activity — what is the deemed essential — certain services will be brought back to life.”

Some have countered that if liquor stores remain open because they are considered essential businesses, then adult-use cannabis should be, too, though Hanna did not explicitly make that argument.

Most of the selectboard members, however, were not convinced. Leigh Davis, for example, insisted that Great Barrington was, in bordering two states that do not permit recreational sales, “in a very unique position.”

“That gives us the position of attracting people over the border from potential hot spots to buy marijuana if this was deemed an essential,” Davis said, referring to New York and Connecticut. “So I guess I really want to put the health of our residents first.”

“We do know that a lot of people travel from out of state to come to these facilities,” member Kate Burke added, “and they’re not traveling to liquor stores because they can do that in their own states.”

Selectboard Chair Steve Bannon, a longtime Great Barrington pharmacist, objected to singling out any one type of business to exempt it from its obligation to close, especially at a time when so many businesses in town are in considerable distress.

“There are a lot of stores on Main Street and in Housatonic who are not open right now that would have every right to say, ‘How about advocating for us?’ — because some of them may not reopen when this is over,” Bannon said. “We are in the middle of a crisis and to encourage any store to open … I just don’t think it’s the right time to do it.”

Board member Bill Cooke said a lot of people are using marijuana medically, but are doing so without medical cards. If, for example, those marijuana users are receiving benefits from the federal government, they might hesitate to obtain medical cards because federal authorities could revoke their benefits.

Great Barrington Selectboard member Bill Cooke. Photo: Terry Cowgill

Resuming recreational sales might help them, Cooke said, adding that he would support Hanna’s request for a letter only if adult-use sales were limited to Massachusetts residents.

Ed Abrahams was the only selectboard member to endorse Hanna’s request for a letter. He explained that the reason liquor stores were allowed to remain open is that if addicts suddenly had to do without alcohol, there could be problems associated with detoxification that the already stressed health care system can’t accommodate at the moment.

The other [reason] is they’re afraid people who need alcohol … will turn to something else, something more dangerous and end up in a hospital, and that’s similar for marijuana,” Abrahams explained. “It’s used widely for anxiety, sleep, pain — and especially now, anxiety and sleep are legitimate issues to try and deal with.”

In the end, the board took no action since Abrahams knew his motion would fail. But the idea that any recreational sales be limited to in-state residents would likely have a lukewarm reception in the cannabis community. Cooke said executives from Theory Wellness, currently Great Barrington’s only marijuana store, told him half of the company’s sales are to out-of-staters. Representatives from Theory declined to comment when contacted by The Edge.

The cannabis industry generally opposes Gov. Baker’s failure to include recreational marijuana sales on his list of essential businesses and services. So does former Gov. William Weld.

A group of five recreational stores and an Iraq war veteran sued Baker over his decision to close the state’s 43 adult-use stores. Theory, which also has a recreational store in Chicopee, was not among the plaintiffs. This week, however, a Suffolk Superior Court judge upheld Baker’s order.

Contacted by The Edge, the Commonwealth Dispensary Association, a trade group representing the state’s cannabis industry, shared a letter it wrote to Baker on March 23 asking him to reconsider his order. Click here to read the letter.

“Although adult use is regulated separately from medical, two-thirds of customers use cannabis for management of medical conditions and symptoms. This loss of access would be akin to losing out on over-the-counter remedies for many.”

Theory Wellness marketing director Thomas Winstanley, at left, brings the opening sign to the front of the shop Jan. 11, 2019, Theory’s first day of selling recreational cannabis. Photo: Terry Cowgill

The association also noted that the industry is already “highly regulated” and that its experience with crowd management positions it “to operate in the current environment” that includes physical distancing.

As for restricting sales to Massachusetts residents only, the association added, “At a time when municipal and state leaders around the country are telling people to limit their time outside of the home, it should not be expected that out-of-state customers will patronize retail locations at the same frequency as they would ordinarily.”

The economic impact will be “devastating,” the association said, adding that 2,000 cannabis employees in the state have been laid off as a result of the shutdown and that some of the stores, which “were just really gaining a foothold,” might not reopen at all.

State Rep. William “Smitty” Pignatelli, D-Lenox, told The Edge he sees no movement in the state legislature to persuade Baker to lift the nonessential designation for adult-use cannabis.

“I don’t feel any support among the governor or the legislature,” Pignatelli said in an interview, adding that medical cards are not difficult to obtain. “The governor’s position was spot-on.”

State Rep. William P. ‘Smitty’ Pignatelli, D-Lenox.

On the subject of opening recreational sales to Massachusetts residents only, Pignatelli was skeptical that it could be policed and added that there was always the likelihood that out-of-state travelers to the Berkshires could recruit locals to buy marijuana for them.

“These are the very traffic patterns we want to discourage in Massachusetts,” Pignatelli said. “For another 30 days or possibly longer, [the industry] needs to suck it up.”

The cultivation, sale and use of recreational cannabis-related products was legalized in Massachusetts through a 2016 ballot initiative. The measure passed by almost 7.5 percentage points statewide, by almost 30 points in Great Barrington and by almost 24 points in Sheffield. Implementation of the new law was left to the hastily created state Cannabis Control Commission. Preceding that law, medical marijuana was legalized in Massachusetts in 2012 through the same process.