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Cannabis businesses were not included in the latest stimulus bill stemming from the COVID-19 pandemic despite concerted efforts by lobbyists that will continue, industry groups said Tuesday.
The U.S. Senate passed legislation late Tuesday that would replenish funds for the Paycheck Protection Program, a U.S. government program administered through the Small Business Administration that offers companies eight weeks of salary, benefits and other costs for their employees, initially as loans. Washington, D.C. insiders close to the cannabis industry have been lobbying Congress to give the marijuana industry access to federal stimulus packages and for long-sought access to banking services in recent days, but representatives told MarketWatch on Tuesday that they were not included.
“There is quite a bit of lobbying,” National Cannabis Industry Association board member Kris Krane said in a phone interview with MarketWatch. “This is the first time I’ve seen the federal trade associations for cannabis rolling in the same direction. From what I’ve seen, everyone is working closely together.”
NCIA spokesman Morgan Fox told MarketWatch in a phone interview that its lobbying effort is now focused on the fourth stimulus package, which the organization expects sometime in May.
“Big and small cannabis companies are going to be in trouble if they don’t get access to federal relief,” Fox said in a phone interview. “On top of pre-existing financial burdens … just being open hasn’t given them much of a lifeline at all. Sales are leveling off, and the new safety protocols are costly. Investments have dried up too.”
Marijuana is illegal under U.S. federal law, but 11 states plus Washington, D.C. have legalized recreational pot sales and roughly 33 have legalized medical marijuana in some form. All but one state with legal recreational-cannabis sales deem the industry essential during the pandemic, but pot-related businesses have been kept on the sidelines for federal stimulus dollars so far.
There is support for the issue among lawmakers on both sides of aisle in congress. Last week, a bipartisan group of 34 members of the House of Representatives sent a letter to Speaker Nancy Pelosi and Minority Leader Kevin McCarthy, asking that cannabis companies be included in the next COVID-19 relief bill. In the Senate, a group of 10 Democrats and independent Bernie Sanders sent a letter to the Appropriations Committee asking it to include cannabis businesses and those that service the sector in a range of SBA-financed coronavirus relief programs.
Beyond access to SBA-funded programs, cannabis industry lobbyists are also asking congress to provide additional clarity to banks and credit unions about servicing cannabis companies, much like a bill that passed the House of Representatives last year. By giving more clarity around banking, industry lobbyists hope to make it easier for companies to gain access to federal stimulus money.
National Organization for the Reform of Marijuana Laws political director Justin Strekal says that the COVID-19 pandemic has compounded many of the issues arising from prohibiting cannabis in the first place and that his organization is largely making the same arguments on the need for reform.
“It’s the same problems, only amplified,” he said.
Unlike the companies themselves, workers across the marijuana industry’s supply chain have and may continue to be eligible to access state unemployment benefits, according to Strekal. So long as employees were working for companies that complied with whatever medical or recreational regime in place, they would be eligible to receive even the federal dollars earmarked for those who have lost their jobs because of the pandemic.
Krane, who is also President at 4Front Ventures Corp. FFNTF, -6.08% FFNT, -2.94% said that prior to the pandemic cannabis employees have been eligible for unemployment benefits, which are paid out by each state, and that has not changed.
“We’re cautiously optimistic that will continue to be the case,” Strekal said.
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While marijuana companies, including ancillary businesses that service the sector, are not eligible for PPP loans, at least one cannabis-related company has received one. New Age Beverages Corp. NBEV, +4.36%, which makes several lines of cannabidiol, or CBD, products, said in an April 15 filing with the Securities and Exchange Commission that it had received a $6.9 million loan from the PPP with an interest rate of 1% a year.
New Age Beverages did not respond to a request for comment.
Industry operators and investors largely are not expecting federal assistance, but say that if it were to materialize, many would welcome the help.
“Yes, [our portfolio companies] want help, for sure,” Jon Trauben, a partner at Altitude Investment Management, said in a phone interview. “The industry employs hundreds of thousands of people, generates billion of dollars in taxes, excluding them from [the stimulus] is heresy, in my view.”
Read:Which cannabis companies are going to survive coronavirus? Here’s how to tell
Altitude is a venture-capital firm that focuses on the cannabis sector and has backed the likes of Privateer Holdings — which spawned Tilray Inc. TLRY, +1.14% — and the Green Organic Dutchman Holdings Ltd. TGOD, Unlike their U.S. rivals, Canadian cannabis companies such as Tilray are eligible for some forms of federal government assistance.
California dispensary operators and others would be eager to accept federal assistance if it were available.
“Definitely would have been nice if they didn’t rule us out,” Cannabis Cafe owner Sean Black told MarketWatch in a text message exchange.
Black’s cafe features a full menu of food and marijuana in the posh West Hollywood neighborhood of Los Angeles, but has been shut down for several weeks. Black says that he has received permission to begin drive-through service which will feature burgers and weed.
“I’m not sure how the drive through will go, but I guess we’ll see?,” he said.
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