Shut Out Of Federal Bailout Funds, Pot Groups Turn To States

By Jack Queen
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Law360 (April 9, 2020, 3:55 PM EDT) -- Cannabis industry groups are urging states to help marijuana companies amid the COVID-19 pandemic by providing emergency loans and pressing Congress to include them in disaster relief programs, saying aid is desperately needed to keep the industry afloat.

In a letter to governors and state treasurers Wednesday, five industry organizations said rules barring cannabis companies from accessing disaster loans through the U.S. Small Business Administration leave them on the brink, despite their designation as essential businesses in many states.

"Like all essential businesses, cannabis businesses are facing significant uncertainty and costs to provide for our employees and to maintain the medical supply chain during this pandemic," they said. "Yet, unlike every other essential business, there is an underlying federal-state tension which puts our businesses in a uniquely vulnerable and dire operational and financial position."

Cannabis businesses are ineligible for hundreds of billions of dollars in emergency funding available through federal coronavirus relief bills due to provisions barring the SBA from dealing with them. The groups called on governors to press for changes in future bills through their states' congressional delegations, citing the tax revenues and jobs the cannabis industry provides.

"As state officials, you know that these businesses are a legitimate part of the local economy and community, creating good-paying jobs and providing what have widely been deemed essential services to citizens," the groups said. "Yet they are still at risk of failing and, if they do, deserve access to emergency loans just like any other business in this country."

Some lawmakers are already pressing their colleagues to lift the restrictions. But in the meantime, the industry is also asking states to step in and provide loan guarantees and other financial support measures.

"Those programs provide short-term liquidity to businesses and workers to assist with operating expenses, healthcare costs, paid sick leave, other benefits required under federal relief packages, and to help out with ensuring business continuity in the event of an economic disaster," the groups wrote.

Cannabis companies have enjoyed some regulatory relief from states, which have lifted restrictions on marijuana delivery, allowed for curbside pickup and rolled back various license renewal deadlines.

But without quick access to cash, the groups said, medical marijuana companies will be unable to continue providing medication to patients who have cancer, HIV/AIDS, severe seizure disorders and other conditions.

The groups also pointed to efforts by cannabis companies to do their part amid the pandemic by donating personal protective equipment to first responders, producing thousands of gallons of hand sanitizer and hiring workers laid off from other industries.

The letter was sent by the National Cannabis Industry Association, the Minority Cannabis Business Association and the Marijuana Policy Project, among others.

--Editing by Abbie Sarfo.

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