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Bill Introduced to Extend COVID-19 Relief to Cannabis Businesses

On April 23, 2020, US Representative Earl Blumenauer (D-OR) introduced HR 6602, the “Emergency Cannabis Small Business Health and Safety Act” in the House Committee on Small Business to extend federal COVID-19 relief to the cannabis industry.

Read the Emergency Cannabis Small Business Health and Safety Act here.

If enacted, this legislation would grant cannabis businesses and service providers access to COVID-19 emergency response funding such as the Paycheck Protection Program, Economic Injury Disaster Loans and Economic Injury Disaster Grants. To date, cannabis businesses have been excluded from these financial assistance programs because federal law classifies cannabis as a Schedule I drug and prohibits its manufacture, importation, possession, use, and distribution.

The Bill also protects US Small Business Administration officials and employees from being held liable for providing a loan or loan guarantee to cannabis businesses and service providers. The introduction of this House bill follows an April 17, 2020 letter from 34 senators to the Speaker of the House Nancy Pelosi (D-CA) and Minority Leader Kevin McCarthy (R-CA) asking for cannabis businesses to be included in COVID-19 economic relief programs. Additionally 10 senators signed onto an April 22, 2020 letter to Senate Majority Leader Mitch McConnell (R-KY) and Senate Minority Leader Chuck Schumer (D-NY).

In addition to pushing for this legislation, industry associations continue to urge legislators to enact provisions of HR 1595, the “Secure And Fair Enforcement Banking Act” (SAFE Banking Act), which prohibits a federal banking regulator from penalizing a depository institution for providing banking services to cannabis-related businesses. The SAFE Banking Act passed the US House of Representatives in September 2019 only to stall in the US Senate. An effort has also been made to encourage state legislators and officials to provide cannabis businesses with COVID-19 relief funding. 

These advocacy efforts cite many reasons why cannabis businesses should have access to the same resources as other industries. Although cannabis remains illegal under federal law, certain states with stay-at-home orders have recognized cannabis businesses as providing vital services and allowed them to remain open. As of April 7, 27 states have identified medical cannabis as essential, including Massachusetts, which legalized recreational use in 2016 but has suspended non-medical sales during its stay-in-place order. Eight of twenty-seven states also continue to permit recreational cannabis. In addition to providing jobs and medicine, state-legal cannabis businesses generate substantial sales tax revenues for states and also pay a higher effective federal tax rate because the US Internal Revenue Code forbids them from taking certain ordinary deductions.

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