In late March, 2020, Congress passed a sweeping stimulus package to support and boost the U.S. economy during the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), is an estimated $2 trillion support package that will provide a one-time payment to individuals and households who earn up to a certain amount annually – $1,200 for individuals and $2,400 for households filing a joint federal income tax return. There is also a provision in the Act to compensate families $500 for each child under the age of 18.
Additionally, the CARES Act also provides $500 billion in corporate aid, $100 billion for healthcare providers, $150 billion for state and local governments, and almost $350 billion in small business loans, which are designed to provide continued employment in order to help stabilize the economy. These small business loans are known as the Paycheck Protection Program.
Paycheck Protection Program
The Paycheck Protection Program, which is overseen by the Small Business Administration (SBA), allows small businesses with 500 employees or fewer to apply for loans to cover payroll expenses, healthcare benefits, salaries, mortgage interest, rent, and utilities.
The Marijuana Industry
Unfortunately, because marijuana is still classified as a Schedule 1 illegal substance on the federal level, marijuana-related businesses are prohibited from benefiting from the Paycheck Protection Program.
The SBA states that businesses are ineligible for the Program if they are “engaged in any activity that is illegal under federal, state, or local law.”
Further, the SBA document states that, “This includes Applicants that make, sell, service, or distribute products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the Applicant’s intended market.”
It continues, “Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.”
A Request for Help
In early April, eleven senators wrote a letter to senate leadership to request that a provision be added to an upcoming spending bill allowing marijuana businesses to have access to federal loan services.
Senator Jacky Rosen wrote a letter to the Appropriations Committee stating that the committee should, “include report language prohibiting the Small Business Administration (SBA) from denying loan applications” to marijuana-related businesses as part of the 2021 fiscal year spending bill.
Senator Rosen was joined by Senators Ron Wyden, Tammy Duckworth, Michael Bennet, Kirsten Gillabrand, Bernie Sanders, Ed Markey, Cory Booker, Bob Menendez, Jeff Merkley, and Kamala Harris, who also signed the letter.
Additionally, in late March marijuana-industry leaders, including National Cannabis Industry Association, National Cannabis Roundtable, Minority Cannabis Business Association, and the Global Alliance for Cannabis Commerce and Cannabis Trade Federation, wrote a letter to lawmakers requesting removal of the SBA restrictions to help ensure that state-legalized cannabis businesses are able to qualify for assistance.
It remains to be seen if that provision will be added to the next COVID-19-related spending bill.