By Diana Novak Jones

Law360 (March 24, 2020, 7:04 PM EDT ) As the country's cannabis businesses try to navigate the closures and cancellations meant to stop the spread of coronavirus, many are calling their attorneys to understand what they have to do as employers in the face of a pandemic.

While a huge portion of the country's workforce has been frozen in place by the global coronavirus pandemic, marijuana retailers, manufacturers and growers are exempt in many cities, listed among "essential" businesses that can stay open.

Some employers want to know what they should do for workers while they stay open, serving customers. Others want to know what to do about employees they can no longer afford.

And because marijuana businesses operate both under heavy regulation and in a legal grey area between state and federal law, there are some extra twists.

For instance, stores exempted from mandatory closures can face problems sourcing workers with the right licenses. Products must be paid for in cash, raising concerns about employee safety. And once the pandemic is over, businesses could face fresh problems finding licensed employees if they had to cut staff.

Law360 talked to experts about what special risks these businesses and workers are facing, and what can be done to mitigate them.

What if our workers don't show up?

Dispensaries across the country are able to stay open, as government officials are concerned that forced closures could separate people from their medicine. Some are even reporting long lines and record sales as customers confront being stuck at home for the next several weeks. That means that right now, open pot businesses need their staff.

But at some dispensaries, workers are begging off over concerns about their or their family's health, according to Kris Krane, president of cannabis company 4Front Ventures. The company has dispensaries in Maryland, Illinois, Michigan, Pennsylvania and several other states. He told Law360 that at one of 4Front's stores, 40% of the staff has been out.

Staff shortages could be solved by moving workers from one dispensary to another, except that strict regulations on where employees are licensed to work prevent it, Krane said. In Illinois, employees are "badged" to work at only one retailer, he said.

"This may only get worse," Krane said. "It's something we've been working on with some of the trade associations in Illinois, to get the badging requirements loosened over the duration of this crisis."

Are we liable if our staff gets sick?

For dispensaries able to serve customers, employees could be at risk of exposure to the virus from someone who doesn't know they have it yet. A pandemic is uncharted territory when it comes to lawsuits — but many dispensaries are working to ensure their employees' safety to prevent exposure to both the virus and liability, attorneys said.

The U.S. Department of Labor's Occupational Safety and Health Administration says employers owe a "general duty" to their workers to offer them work and a workplace that will not cause them harm.

"The likelihood is that provision would apply here," said Jinouth Vasquez Santos, an associate in Seyfarth Shaw LLP's labor and employment practice.

Santos says her firm is advising their clients to follow the U.S. Centers for Disease Control and Prevention's guidance on contact, group sizes and distance between customers and staff, she said.

"If you have a company that is following the protocols, putting up the proper signage, then I think from a defense perspective there is an argument that the employer should not be liable," Santos said.

Krane said a huge part of the changes 4Front has made in the wake of the virus' spread is to protect its employees. Most of its stores are doing curbside pickup, but the Illinois store is serving medical patients indoors, Krane said.

But while other restaurants and stores that are open can have customers use their credit cards or phones to pay, dispensaries have to handle customer cash. Credit card payments are not available to the marijuana industry.

"That creates more of a public health risk," Krane said. "If they could just pay for it online, we could deliver directly to their houses, drop off at the door, or simply run out their product, drop their bag [in the car], and it would be much safer."

What if we don't need the employees we have?

The "essential" designation is keeping some dispensaries open, but it hasn't prevented layoffs from hitting the cannabis industry.

Franny Tacy, owner of Asheville, North Carolina-based CBD company Franny's Farmacy, told Law360 she had already laid off a few people to get ahead of financial problems caused by the virus. Krane said 4Front hadn't laid anyone off due to the virus, but he couldn't promise that would remain the case.

"It's going to depend on a lot of things: what happens with regulations, shelter-at-home orders," Krane said. "Our goal is to stay open as long as we can. If we can't and we can't maintain sales, we might have to make some really hard decisions."

Santos of Seyfarth Shaw said any company considering layoffs needs to stay abreast of changes to state regulations on ending employment.

For example, California Gov. Gavin Newsom signed an executive order March 17 altering the Cal-WARN Act, which had required employers to give workers 60 days notice before letting them go. The order eliminates that notification requirement for certain circumstances tied to the outbreak.

But employers should know that their workers can apply for unemployment benefits from the state, as long as they are actually "employees."

"In very basic terms that means that the employer controls many things about the worker and pays all the appropriate employment taxes, including unemployment premiums," said Cher Haavind, deputy executive director and chief communications officer for Colorado's Department of Labor and Employment, which handles the state's unemployment benefits program. "As long as that is true, those employees would qualify if they are laid off."

Justin Strekal, political director for the National Organization for the Reform of Marijuana Laws, or NORML, said his understanding is that each state determines its own policy on unemployment benefits.

But in general, "As long as the state-licensed cannabis company has been paying their unemployment insurance taxes, laid-off workers will be able to access those," Strekal said.

Haavind noted that employees are awarded benefits on a case-by-case basis.

Federal unemployment relief programs created because of the virus, like the recently enacted Families First Coronavirus Response Act, could also provide support for unemployed marijuana workers, Strekal said. While there is no express language addressing cannabis workers, Strekal said he believes that states have the authority to decide who is eligible to receive it.

"As long as they don't put a prohibition on those funds being used [on cannabis workers], then the transfer of that money to the state program absolves the Schedule 1 status," Strekal said, referencing marijuana's listing on the federal schedule of illegal drugs.

Strekal said NORML reached out to its allies in Congress for help ensuring anti-cannabis provisions weren't slipped into the legislation supporting workers.

However, rehiring after the outbreak passes will be another issue altogether, Santos added, because new employees may need training and licensing.

"It is going to be an expensive thing if you let people go," she said.

--Editing by Brian Baresch and Kelly Duncan.

This year already promised to be a tough one for the cannabis industry, before the coronavirus compounded the many problems businesses have been facing. In this series, Law360 looks at the specific impact the virus is having on the nascent industry as it fights for a foothold in the U.S.

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