TABLE OF CONTENTS
President Donald Trump recently signed three historic coronavirus federal stimulus bills leaving many cannabis businesses wondering how the financial relief will affect them. The stimulus provides relief for many businesses and individuals across states. This short guide answers all your frequently asked questions about how the federal stimulus affects your cannabis business.
What’s In The Federal Stimulus Bills?
Under the Coronavirus Preparedness and Response Supplemental Appropriations Act (CPRSA) provides the following:
- Provisions to the Economic Injury Disaster Loan Program (EIDLP). The EIDLP provides eligible small businesses with working capital loans of up to $2 million during a disaster.
- Declared the coronavirus crisis a qualifying disaster for EIDLP loans and allocated $20 million to the Small Business Administration (SBA) for administrative costs.
The Families First Coronavirus Response Act (Families First Act) provides the following:
- Employers with under 500 employees are required to provide two weeks of paid sick leave to employees who are unable to work due to quarantine, coronavirus symptoms, or caring for someone affected by the quarantine. Employers will receive tax credits to offset the paid leave costs.
The Coronavirus, Aid, Relief, and Economic Security Act (CARE) provides the following:
- $2 trillion stimulus package, which includes $350 billion reserved for small businesses.
- Paycheck Protection Program, which expands disaster loan programs to cover payroll costs, group health care benefits costs, employee salaries, mortgage and rent payments, utilities, and interest on debt incurred before February 15, 2020.
- $10 billion through an Emergency Grant Program and $9.5 billion to the Department of Agriculture for farmers, $14 billion to the Commodity Credit Corporation for agricultural producers, $20.5 million for the United States Department of Agriculture (USDA) Rural Development Business and Industry Loan Guarantee Program, and temporary extensions on repayment of commodity marketing assistance loans.
Are Cannabis Businesses Eligible For Stimulus Relief?
Currently, marijuana is listed as a Schedule I substance meaning it has no medicinal value and has a high potential for abuse. Because of this federal prohibition, cannabis businesses and some ancillary businesses are not eligible to receive any stimulus relief from these government programs.
For instance, the SBA recently confirmed that cannabis companies are not able to access SBA-funded programs such as EIDL Programs. Despite marijuana businesses being just as affected as other businesses, they are not eligible for this financial assistance.
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The SBA has not yet confirmed the eligibility of cannabis businesses for the more comprehensive Paycheck Protection Program, which directs aid towards job retention and business operating expenses. Prior SBA rules and policies may prohibit access to this program by cannabis businesses and few other types of businesses, too.
Certain ancillary businesses may qualify for relief under the stimulus packages. Eligibility is determined on a case-by-case basis. Bank’s resistance to deal with cannabis businesses may continue to set challenges for ancillary businesses trying to obtain SBA funds.
How Are Cannabis Businesses Being Protected?
Since federal relief won’t likely be coming to cannabis businesses, industry trade organizations including the National Cannabis Industry Association, National Cannabis Roundtable, Minority Cannabis Business Association, and the Cannabis Trade Federation issued a letter to Congress calling for protections for cannabis businesses.
The letter calls for lawmakers to remove certain restrictions on cannabis businesses and ensure that they can qualify for assistance to help out the estimated 240,000 full-time employees in the industry. The groups note the inequity in cannabis businesses complying with certain federal regulations, while being dismissed by the federal government.
“Our members follow strict regulations, create jobs, generate billions of dollars in tax revenue – including federal corporate tax revenue – and act as good corporate citizens, yet it appears as if these businesses will not be eligible for the same loans available to other businesses in this country at risk due to the global pandemic,” the groups said.
The group continued by saying, “the ineligibility of cannabis businesses for disaster assistance loans is especially inequitable given that these same cannabis businesses are required to comply with other coronavirus-related measures, such as paid sick leave coverage. We are not seeking special treatment for state-legal cannabis businesses. We only seek to have them treated on an equal level as all other job-generating, tax-paying companies in this country.”
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In a blog post, the nonprofit group NORML stated that they have been reaching out to their allies on Capitol Hill to ensure that “any Unemployment Insurance aid packages” are also meant for “cannabis-industry personnel who have been or will be either furloughed from their jobs.”
Are Hemp Businesses Eligible For Protections?
Businesses that produce hemp and hemp-derived products that are legal under the 2018 Farm Bill may be eligible for SBA loans. The SBA has made it clear that legal hemp-related businesses are protected at the federal and state level.
Can Laid-Off Cannabis Workers Receive Unemployment Benefits?
State-level unemployment insurance will continue to provide benefits for cannabis employees who have been let go. Cannabis workers who worked for a licensed marijuana business should be eligible to receive unemployment benefits if the company has paid their unemployment insurance taxes.
Cannabis bills have been notoriously left out of this massive legislation signed into law on March 27, 2020. Fortunately, many lawmakers are fighting the good fight and asking for cannabis businesses to be eligible for financial relief. It’s an unprecedented time that may yield some much-needed financial assistance for “essential businesses.”