The marijuana industry is walking on shaky ground during the COVID-19 pandemic. In prevision of stay-at-home orders, customers were crowding legal marijuana retailers to stock up on pot before being quarantined, and states have been labeling dispensaries “essential businesses” to keep them open during the quarantine as they provide medical marijuana to patients. Now, these same “essential businesses” are learning that they won’t be receiving federal dollars to keep afloat.
At a time when most of the country is confined at home and businesses are forced to close—including in Wisconsin, by order of Gov. Tony Evers and effective starting Wednesday, March 25—the Trump Administration signed a $2.2 trillion aid package to help businesses survive and keep workers paid. This includes $500 billion dedicated to loans and guarantees to businesses and local governing bodies, as well as an additional $350 billion in loans specifically for small businesses with 500 employees or fewer to cover payroll, rent and other expenses.
Marijuana businesses, however, will not receive any of this money, the government confirmed. The federal Small Business Administration (SBA) announced that even state-legal marijuana businesses, including retailers, growers and processors, are ineligible for financial aid through the relief package because cannabis remains a Schedule I controlled substance in the eyes of the federal government.
One exception is made for businesses dealing solely in cannabis products with less than 0.3% of THC, also known as hemp, as hemp was made federally legal through the Farm Bill signed into law by President Donald Trump in December 2018. The SBA acknowledged this on Tuesday, March 24: “With the exception of businesses that produce or sell hemp and hemp-derived products (Agriculture Improvement Act of 2018, Public Law 115-334), marijuana-related businesses are not eligible for SBA-funded service.” That same day, Prianka Sharma, assistant chief counsel to the SBA, posted on the agency’s website to celebrate the legal cannabis industry and advocating for hemp.
In February, the National Organization for the Reform of Marijuana Laws (NORML) estimated that the legal marijuana industry employs more than 240,000 workers, which doubled in the past two years. This quarter-million people will seemingly not receive any of the $2.2 trillion federal aid, as their employers do not qualify for loans that would help them cover payroll. This could mean numerous marijuana businesses will have to close permanently. These businesses’ employees would then join the ranks of the more than 3 million new unemployed people seeking financial support.
Legislative Block
“All that is needed by Congress is the passage of a one-line legislative fix to protect tens of thousands of American jobs in a supply chain that serves over three million medical marijuana patients,” said Justin Strekal, NORML's political director. “It is critical that Congress authorize the Small Business Association to similarly recognize their importance and allow the agency to provide these small businesses with economic assistance to ensure patient access and continuity of care.”
Bills have been introduced in Congress to address this contradictory attitude of dubbing marijuana businesses essential while starving them of resources. HR 3540, the Ensuring Safe Capital Access for All Small Businesses Act, would prohibit the SBA from declining to provide loans to an entity solely because it is cannabis-related. Similar language is found in the Marijuana Opportunity, Reinvestment and Expungement Act (or MORE Act), which aims to entirely remove marijuana from the Controlled Substances Act, effectively decriminalizing it federally and allowing the states to set their own policies. It would allow the cannabis industry in legal states to operate without federal interference, access banking and be treated normally in regard to taxes and federal aid. Unfortunately, despite support from high-profile figures like former presidential candidate Elizabeth Warren, it is stalled in Congress and unlikely to pass.
This is not the first time that marijuana businesses are denied basic rights due to federal prohibition, as they have been denied access to banking services for years. Banks can be held liable if they hold money that was illegally obtained, and as selling marijuana is still considered a federal crime, cannabis businesses are considered to be a liability. This forces most of them to only accept cash, which makes them more vulnerable to robberies, while blocking access to financial services. Despite that, the Secure and Fair Enforcement (SAFE) Banking Act, which would grant marijuana businesses equal rights in regard to banking, is also being blocked in the Senateafter being approved by the House.
