New House Bill Would Give Cannabis Companies Access to Federal Coronavirus Relief Funds

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A House bill that would make financial aid available to legal cannabis businesses impacted by the coronavirus pandemic has been introduced by Reps. Earl Blumenauer (D-OR) and Ed Perlmutter (D-CO).

Filed today, the “Emergency Cannabis Small Business Health and Safety Act” would give plant-touching marijuana companies and industry “service providers” the same access to federal coronavirus relief programs as other small businesses.

“As Congress seeks to provide relief to small businesses across America, chief among those being left out are state-legal cannabis businesses that are essential to communities and have met the demands of this crisis,” said Blumenauer, who is also the founder and co-chair of the Congressional Cannabis Caucus.

As written, the bill would allow cannabis firms to qualify for three types of coronavirus relief funding administered by the U.S. Small Business Administration (SBA): The Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL) and emergency EIDL grants included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020.

The bill would also protect the SBA officials and employees from being held liable for “providing a loan or loan guarantee to a cannabis-related business legitimate business or service provider.” 

In a statement, National Cannabis Industry Association (NCIA) executive director Aaron Smith highlighted the legal U.S. cannabis industry’s nearly 250,000 jobs and said “many businesses will not survive the pandemic without help.”

“Cannabis is an essential industry and we must be treated fairly,” Smith wrote in an email. “Nearly a quarter-million jobs depend on it.”

Perlmutter echoed those sentiments, saying that “cannabis businesses are major employers and significant contributors to local economies in Colorado and across the country.”

“They should receive the same level of support as other legal, legitimate businesses and be eligible for SBA relief funds during this COVID-19 crisis,” he said.

Cannabis firms are currently unable to access billions of dollars in COVID-19 relief because marijuana is still considered illegal under federal law. 

Their inability to access federal emergency funds is exacerbated by the fact that marijuana ventures pay an effective tax rate that is 3.5 times greater than other businesses because section 280E of the Internal Revenue Code forbids state-legal cannabis companies from taking ordinary deductions such as payroll, rent and utilities, among others.

“They already face disproportionate financial burdens during normal conditions, and the strains created by the coronavirus response are putting them at an even greater disadvantage and jeopardizing their ability to provide vital healthcare services,” Smith noted.

If passed, Blumenauer’s bill would effectively prohibit the SBA from denying cannabis companies access to the next round of COVID-19 relief funding. 

“Notwithstanding any other provision of law, a business shall not be ineligible for assistance,” the bill reads.

Across the country, cannabis businesses have been deemed “essential” in many markets (except adult-use operators in Massachusetts). 

Nevertheless, some cannabis firms have already begun slashing jobs. Earlier this month, New York’s Acreage Holdings furloughed 122 employees and closed certain U.S. operations in an effort to conserve cash.

“As a result of the COVID-19 pandemic, we have made the very difficult decision to furlough several of our employees and close certain facilities while we navigate through the crisis,” Acreage CEO Kevin Murphy said at the time.

In anticipation of further fallout, several cannabis lobbyists and lawmakers had begun campaigning for marijuana businesses to be included in the next round of federal coronavirus relief in recent weeks.

Yesterday, Senators Jacky Rosen (D-NV), Ron Wyden (D-OR) and eight others penned a letter to Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader Chuck Schumer (D-NY) asking for cannabis businesses to be included in future relief packages.

“This lack of access to SBA assistance for cannabis small businesses will undoubtedly lead to unnecessary layoffs, reduced hours, pay cuts, and furloughs for the workers who need support the most,” they wrote.

Last Friday, a bipartisan group of House members led by Blumenauer sent a letter to House Speaker Nancy Pelosi (D-CA) and House Minority Leader Kevin McCarthy (R-CA) calling for similar relief. 

In that letter, Blumenauer and others described the exclusion of cannabis businesses from the $2.2 trillion CARES Act as a “shortcoming.”

“State-legal cannabis businesses need access to CARES Act programs to ensure they have the financial capacity to undertake the public health and worker-focused measures experts are urging businesses to take,” the letter read.

Earlier this month, six trade groups -- the Cannabis Trade Federation, Global Alliance for Cannabis Commerce, Marijuana Policy Project, Minority Cannabis Business Association, National Cannabis Roundtable and the NCIA -- urged state leaders to create their own lending programs to help cannabis companies that do not qualify for PPP and EIDL relief.

The United Food and Commercial Workers International Union (UFCW), which represents grocery, healthcare and cannabis industry workers, also sent a letter to SBA Administrator Jovita Carranz earlier this month asking her agency should issue loans to marijuana businesses.

“The SBA should not treat legal and state licensed cannabis related businesses (CRBs) any different from other businesses seeking the same type of loan,” UFCW international president Marc Perrone wrote.

The House is expected to pass another round of federal aid for small businesses today, according to multiple sources. On Tuesday, the Senate approved a $484 billion bill that includes $310 billion in new funds for the PPP. Marijuana companies were left out of that bill, however. 

Press releases with additional details are included below.

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House Bill Introduced to Make Cannabis Businesses Eligible for COVID-19 Relief Funds

Widespread recognition of necessity for regulated cannabis providers spurs calls for equal access to federal assistance

WASHINGTON, D.C. – Legislation to give legal marijuana businesses, which have been declared essential in a majority of states with regulated cannabis markets, access to resources being made available by congressional COVID-19 emergency response packages was introduced in the House today by Rep. Earl Blumenauer (D-OR) and Rep. Ed Perlmutter (D-CO). The Emergency Cannabis Small Business Health and Safety Act would stop cannabis businesses and those that provide services to them from being excluded from further federal relief funding provided through the Small Business Administration (SBA).

The full text of the bill is available here.

“The cannabis industry employs nearly a quarter of a million Americans and has been deemed essential in state after state, yet many businesses will not survive the pandemic without help,” said Aaron Smith, executive director of the National Cannabis Industry Association. “They already face disproportionate financial burdens during normal conditions, and the strains created by the coronavirus response are putting them at an even greater disadvantage and jeopardizing their ability to provide vital healthcare services. We are incredibly grateful for the dozens of lawmakers who are urging their colleagues to give cannabis businesses fair access to federal relief funds in these difficult times.”

Under current policy, businesses that deal directly with cannabis production and sale, as well as many that provide services to them, are ineligible for any SBA programs. Many indirect businesses have not been declared essential and have been forced to close. Cannabis businesses that have remained open must contend with declining sales, supply chain disruptions, onerous tax rates, lack of access to banking services, and the costs incurred by implementing additional health and safety measures to protect employees and customers. 

Last week, Rep. Blumenauer and nearly three dozen of his colleagues sent a letter to House leadership urging them to make cannabis businesses eligible for SBA programs. Senators Jacky Rosen (D-NV) and Ron Wyden (D-OR) along with eight co-signers sent a similar letter to Senate leadership on Wednesday. They have been joined by cannabis industry advocates, the United Food and Commercial Workers International Union, state officials including Colorado Gov. Jared Polis, and others.

Cannabis is legal for adults in eleven states as well as the District of Columbia and the territories of CNMI and Guam, and 33 states as well as several territories have comprehensive medical cannabis laws. Every state with a functional regulated cannabis market is allowing continued legal access in some form during the ongoing pandemic restrictions.

The National Cannabis Industry Association (NCIA) is the largest cannabis trade association in the U.S. and the only organization broadly representing cannabis-related businesses at the national level. NCIA promotes the growth of a responsible and legitimate cannabis industry and works toward a favorable social, economic, and legal environment for that industry in the United States.

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Reps. Blumenauer and Perlmutter Introduce Legislation to Make Cannabis Businesses Eligible for COVID-19 Relief

Washington D.C. – Today, Reps. Earl Blumenauer (OR-03) and Ed Perlmutter (CO-07) introduced legislation that would make cannabis businesses eligible for Small Businesses Administration (SBA) COVID-19 relief programs.

Currently, state-legal cannabis businesses are being left out of relief that was established to help small businesses weather the COVID-19 pandemic. Most notably, they are unable to access and participation in SBA’s loan programs—financial support that is designed to pay workers, health care benefits, and family or sick leave. This legislation would grant state-legal cannabis businesses eligibility for the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and Economic Injury Disaster Loans emergency advances.

“As Congress seeks to provide relief to small businesses across America, chief among those being left out are state-legal cannabis businesses that are essential to communities and have met the demands of this crisis,” said Rep. Blumenauer, founder and co-chair of the Congressional Cannabis Caucus. “We should include state-legal cannabis in federal COVID-19 reponse efforts. Without providing these businesses the relief needed to carry out the recommended public health and worker-focused measures, we are putting these hard-working people – and ourselves – at risk.”

“Cannabis businesses are major employers and significant contributors to local economies in Colorado and across the country,” said Rep. Perlmutter (CO-07). “They should receive the same level of support as other legal, legitimate businesses and be eligible for SBA relief funds during this COVID-19 crisis.”

Blumenauer also led a bipartisan coalition of nearly three dozen Congressmembers in calling on House leadership to ensure cannabis businesses are included in future relief efforts.

To read the full text of the bill, click here.


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