Marijuana Businesses Hung Out to Dry in Economic Relief Package

Marijuana Businesses Hung Out to Dry in Economic Relief Package

Last week President Trump signed into law a historic $2 trillion stimulus package to help alleviate economic strain caused by the coronavirus. The aid package, which is the largest of its kind, seeks to help kickstart the economy by providing workers, small businesses, and struggling industries with liquid capital including $349 billion in forgivable loans available to distressed small businesses.

The aid package will not be available to companies operating in the cannabis industry, due to the fact that cannabis remains illegal under the Controlled Substance Act. The Small Business Administration (“SBA”),  tasked with processing and distributing the loans, issued the following statement:

“Because federal law prohibits the sale and distribution of cannabis, the SBA does not provide financial assistance to businesses that are illegal under federal law. Businesses that aren’t eligible include marijuana growers and dispensers, businesses that sell cannabis products, etc., even if the business is legal under local or state law.”

However, despite the blanket ban on the industry, some businesses may still qualify for federal loans. According to the SBA, companies that produce or sell hemp and hemp-derived products pursuant to the Agriculture Improvement Act of 2018, otherwise known as the 2018 Farm Bill, are permitted to apply for loans.

It is uncertain whether the SBA’s refusal to provide loans to the cannabis industry will have a profound effect. Currently, many cannabis businesses are seeing a significant uptick in sales as states continue to employ shelter-in-place restrictions. However, the volatile state of the economy and protective measures implemented may result in a significant effect on business operations in the future. As we shared in a recent blog, some states are closing adult-use cannabis dispensaries claiming that they are non-essential businesses.

Along with other industries subject to these protective measures, cannabis businesses should continue to follow mandated restrictions and prepare for a potentially significant impact on sales in the coming months.

We will continue to provide updates on the cannabis industry resulting from this rapidly evolving health and economic emergency.

With a practical approach, Chad provides compliance guidance and litigation defense on matters related to cannabis, advertising and marketing, teleservices, and other consumer protection issues.

1200 798 Walter (Chad) Blackham
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