Client Alert


Cannabis Businesses Currently Ineligible For Coronavirus Disaster Relief

A white background with a cannabis leaf.

On Monday March 23, the federal Small Business Administration (SBA) confirmed that cannabis businesses are ineligible for disaster relief loans to assist with the detrimental effects of the Coronavirus outbreak.

In the recent Twitter post, the SBA stated, “With the exception of businesses that produce or sell hemp and hemp-derived products [that were federally legalized under the 2018 Farm Bill], marijuana-related businesses are not eligible for SBA-funded services.”

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Cannabis businesses are regularly denied access to federally administered programs, because cannabis remains illegal under the federal Controlled Substances Act. The SBA relief program, using federally appropriated dollars, is no exception. Even if legal under a particular state law, any cannabis related business will miss out on the SBA assistance. After further inquiry, the SBA recommended that cannabis businesses seek alternative options through state and local programs.

Just last week, a number of the largest cannabis industry trade groups delivered a joint letter to Congress urging the removal of this prohibition and to allow cannabis businesses access to the same relief as other federally legal industries:

“The ineligibility of cannabis businesses for disaster assistance loans is especially inequitable given that these same cannabis businesses are required to comply with other coronavirus-related measures, such as paid sick leave coverage. We are not seeking special treatment for state-legal cannabis businesses. We only seek to have them treated on an equal level as all other job-generating, tax-paying companies in this country.”

Bills have been pending in Congress for a while seeking legislative relief to the challenge of accessing SBA services, but no movement to date.

HMB Legal Counsel will continue to provide updates as the situation evolves. The ongoing issues related to the spread of the Coronavirus (COVID-19) have had and will continue to have a significant impact on individuals, families, businesses and markets. Visit our collection of resources providing guidance during these fast-changing circumstances. Please reach out to your HMB team member to answer specific questions.

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