COVID-19: Federal Relief Help Leaves Many Marijuana Companies In The Weeds

In response to the destructive economic impact of the coronavirus pandemic, Congress pertained to the rescue of American businesses, little and large, by approving an approximated $2 trillion stimulus bundle, referred to as the Coronavirus Help, Relief, and Economic Security Act. The CARES Act, in part, prescribes $349 billion in bank loan to help American business survive throughout this economic crisis.

In addition to enacting the CARES Act, President Donald Trump signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act, which contains a $20 million grant to the Small Company Administration Disaster Relief Fund to offer additional low-interest loans to companies affected by COVID-19

Like many other American businesses, marijuana business are struggling with significant economic obstacles, yet they are denied taking advantage of these SBA loans on the basis of their federal legality and their ability to comply with “all appropriate federal laws and policies.”

The cannabis market consists of both hemp and cannabis businesses. Hemp ended up being legal upon the enactment of the Agriculture Enhancement Act of 2018 (much better known as the 2018 Farm Costs), which specifically got rid of the agricultural crop from the meaning of cannabis under the Controlled Substances Act(CSA). While certified hemp organisations are entitled to the exact same stimulus relief as services in many other industries, cannabis organisations are not.

In a statement launched shortly after the enactment of the CARES Act and of the Coronavirus Readiness and Response Supplemental Appropriations Act, SBA spokesperson Carol Chastang discussed:

Since federal law restricts the sale and distribution of marijuana, the SBA does not offer monetary assistance to businesses that are unlawful under federal law. […] Businesses that aren’t eligible consist of cannabis growers and dispensers, services that sell cannabis products, etc., even if business is legal under regional or state law.

This is not a new SBA position. In a 2018 Police Notice, the SBA explained that neither “Direct Marijuana Organisations” nor “Indirect Cannabis Companies” are qualified for SBA-funded help.

More recently, the SBA released the 2019 Information Notice, in which it even more clarified that cannabis businesses are not entitled to receiving money appropriated for catastrophe relief because the CSA continues to prohibit the sale, manufacture, circulation, and possession of marijuana.

Although the 2019 Information Notice continues to specifically omit direct and indirect cannabis services from the loan support programs, it supplies that hemp companies that “establish or market CBD and CBD products derived from hemp would not be thought about Direct Cannabis Businesses [… and] would be qualified to take part in SBA technical assistance programs, if the business and its items are legal under state law and abide by all applicable federal, state, and regional laws and guidelines” (Emphasis added).

Therefore, lots of companies engaged in the manufacture, circulation, sale, and marketing of hemp-derived products, consisting of cannabidiol (CBD)- instilled products, would also be ineligible for these loans. As I wrote in this column, the FDA, which holds authority over hemp CBD foods, dietary supplements, cosmetics, and tobacco items, in accordance with the 2018 Farm Expense, deems the sale and marketing of many of these items unlawful under the Food, Drug and Cosmetics Act

As of January 2020, the marijuana industry was employing over 240,000 full-time workers across 34 states and the District of Columbia, making it one of the greatest job-creation makers in the country. Unless the federal government reviews its existing policies and raises the irregular and unfair constraints on the cannabis market, marijuana and hemp CBD business, along with the American labor force they support, will be left in the weeds.

Nathalie Bougenies practices in the Portland workplace of Harris Bricken and was named a “2019 Increasing Star” by Super Attorney Magazine, an honor bestowed on only 2.5%of qualified Oregon lawyers. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and policies surrounding hemp and hemp CBD items. Nathalie is also a regular factor to her firm’s Canna Law Blog