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Law360 (June 5, 2020, 7:15 PM EDT) -- The American Bar Association sent a letter Friday to the U.S. Small Business Administration urging the agency to clarify that law firms that work with the legal cannabis industry are not ineligible for federal relief in light of the coronavirus pandemic.
The ABA said that while most law firms qualify as small businesses under the Coronavirus Aid, Relief, and Economic Security Act, the SBA's rules could exclude firms that have worked with cannabis businesses from receiving funds through the agency's Paycheck Protection Program. The organization said the SBA's standard operating procedures are too broad and create a very low standard for ineligibility.
"A law firm where a single lawyer provided advice to a single marijuana business client on legal issues for a nominal fee would arguably be ineligible under this language for the SBA PPP loan program," the ABA said. "Excluding lawyers and law firms serving clients in cannabis-related businesses from PPP eligibility has the potential to cause extensive, unintended economic harm."
Representatives of the Treasury Department and Small Business Administration did not immediately respond to requests for comment Friday.
The ABA, which has nearly 400,000 members, according to its website, said it supports amending federal law to ensure lawyers don't face the threat of criminal charges when representing cannabis clients in states that have legalized marijuana.
"Even before those changes are made to federal law, lawyers should also not be penalized for providing legal services to cannabis-related businesses that comply with state laws," the ABA said.
In April, a bipartisan group of 34 U.S. representatives urged House leadership to include state-legal cannabis businesses in the next coronavirus relief bill, saying a lack of access to federal loans will lead to unnecessary layoffs, pay cuts and furloughs for cannabis industry workers.
Later that month, a coalition of cannabis trade organizations echoed the call to change SBA policies they said were inequitable.
--Additional reporting by Sam Reisman. Editing by Jack Karp.
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