COVID-19: Federal Relief Support Leaves Many Cannabis Services In The Weeds
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COVID-19: Federal Relief Support Leaves Many Cannabis Services In The Weeds

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In response to the devastating financial effect of the coronavirus pandemic, Congress concerned the rescue of American services, small and big, by approving an estimated $2 trillion stimulus bundle, called the Coronavirus Help, Relief, and Economic Security Act. The CARES Act, in part, prescribes $349 billion in bank loan to help American business survive during this recession.

In addition to enacting the CARES Act, President Donald Trump signed into law the Coronavirus Preparedness and Response Supplemental Appropriations Act, which contains a $20 million grant to the Small Business Administration Catastrophe Relief Fund to offer extra low-interest loans to companies affected by COVID-19

Like many other American services, marijuana companies are struggling with significant economic obstacles, yet they are rejected taking advantage of these SBA loans on the basis of their federal legality and their capability to comply with “all appropriate federal laws and guidelines.”

The marijuana industry includes both hemp and marijuana services. Hemp ended up being legal upon the enactment of the Farming Improvement Act of 2018 (better understood as the 2018 Farm Costs), which expressly eliminated the agricultural crop from the definition of marijuana under the Controlled Substances Act(CSA). While qualified hemp organisations are entitled to the exact same stimulus relief as services in a lot of other industries, cannabis organisations are not.

In a declaration launched quickly after the enactment of the CARES Act and of the Coronavirus Readiness and Reaction Supplemental Appropriations Act, SBA representative Carol Chastang explained:

Since federal law restricts the sale and distribution of marijuana, the SBA does not provide financial assistance to companies that are illegal under federal law. […] Businesses that aren’t qualified include cannabis growers and dispensers, organisations that sell cannabis products, and so on, even if business is legal under regional or state law.

This is not a brand-new SBA position. In a 2018 Authorities Notice, the SBA described that neither “Direct Marijuana Businesses” nor “Indirect Marijuana Companies” are eligible for SBA-funded support.

More just recently, the SBA launched the 2019 Details Notice, in which it even more clarified that marijuana services are not entitled to getting money appropriated for catastrophe relief due to the fact that the CSA continues to forbid the sale, manufacture, distribution, and ownership of cannabis.

Although the 2019 Details Notice continues to specifically exclude direct and indirect marijuana services from the loan assistance programs, it supplies that hemp business that “establish or market CBD and CBD products stemmed from hemp would not be thought about Direct Marijuana Organisations [… and] would be qualified to take part in SBA technical support programs, if business and its products are legal under state law and adhere to all applicable federal, state, and regional laws and guidelines” (Focus included).

Therefore, numerous companies engaged in the manufacture, circulation, sale, and marketing of hemp-derived products, consisting of cannabidiol (CBD)- infused products, would also be disqualified for these loans. As I composed in this column, the FDA, which holds authority over hemp CBD foods, dietary supplements, cosmetics, and tobacco items, in accordance with the 2018 Farm Expense, considers the sale and marketing of most of these items illegal under the Food, Drug and Cosmetics Act

As of January 2020, the marijuana industry was employing over 240,000 full-time workers throughout 34 states and the District of Columbia, making it one of the greatest job-creation makers in the nation. Marijuana business are needed, under federal law, to comply with numerous COVID-19 procedures, such as paid ill leave protection. In light of this, the ineligibility of numerous marijuana companies for SBA loans appears especially inequitable. Unless the federal government reviews its current policies and raises the inconsistent and unfair restrictions on the marijuana industry, cannabis and hemp CBD business, in addition to the American workforce they support, will be left in the weeds.


Nathalie Bougenies practices in the Portland workplace of Harris Bricken and was named a “2019 Rising Star” by Super Attorney Publication, an honor bestowed on only 2.5%of qualified Oregon attorneys. Nathalie’s practice concentrates on the regulative structure of hemp-derived CBD (” hemp CBD”) products. She is an authority on FDA enforcement, Food, Drug & Cosmetic Act and other laws and regulations surrounding hemp and hemp CBD products. She likewise encourages domestic and international clients on the sale, circulation, marketing, labeling, importation and exportation of these products. Nathalie regularly speaks on these problems and has made nationwide media appearances, including on NPR’s Market. Nathalie is likewise a routine factor to her company’s Canna Law Blog Site

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