In response to the drastic economic impact COVID-19 has had on small businesses in recent weeks, President Trump announced that the Small Business Administration (SBA) was authorized to provide $50 billion in low-interest loans – more than double the amount of loans provided by the SBA in 2019 – to keep them operating during the pandemic. After the announcement, the SBA established a disaster assistance loan program for small businesses, which could potentially provide up to $2 million dollars in assistance for an applicant. The cannabis industry, however, has been excluded from this relief, along with agricultural enterprises, casinos, racetracks, and religious and charitable organizations. With respect to cannabis specifically, SBA public affairs specialist Carol Chastang told Cannabis Business Times that “the SBA does not provide financial assistance to businesses that are illegal under federal law… even if the business is legal under local or state law.”
Although cannabis use is legal in Canada, Canadian businesses in the cannabis industry are finding themselves excluded from country-wide aid packages as well. The Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) announced a plan to increase loans issued on commercial terms by $10 billion. Dan Sutton, CEO of Canadian-based Tantalus Labs, stated that a BDC account manager said they aren’t doing business with cannabis firm at this time. CEO of the Cannabis Council of Canada, George Smitherman, confirmed that this response “fits with what the industry has been told to date.” Participants in Canada’s cannabis industry have shared potential challenges with a disruption in cashflow, such as crop loss and dispensary shut downs. Canada’s largest cannabis company, Canopy Growth, shut down 23 of its retail stores on March 17th, and other cannabis companies announced temporary closures of their flagship stores.
It appears that businesses in the cannabis industry that survive the financial burdens related to the COVID-19 outbreak will have to do so without government intervention and assistance.
