Marijuana Businesses Are Ineligible For Coronavirus Disaster Relief, Federal Agency Confirms

Marijuana Moment reports…”The federal Small Business Administration (SBA) reiterated on Monday that marijuana companies are not eligible for disaster relief loans to lessen the blow of the coronavirus outbreak.”

 

Here’s the introduction – we suggest you link through and closely read this important  MM report

Because cannabis remains illegal at the federal level, the marijuana industry is being denied access to these aid opportunities, including programs administered by SBA. The agency’s Northwest branch confirmed that in a response to a tweet from a cannabis business owner who inquired about eligibility.

“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,” the post states.

Read full story. https://www.marijuanamoment.net/marijuana-businesses-are-ineligible-for-coronavirus-disaster-relief-federal-agency-confirms/

 

Also see the same report over at Lex Blog

On March 23, the federal Small Business Administration (SBA) stated that cannabis businesses will not be eligible for loans under its Economic Injury Disaster Loan (EIDL) Program, despite expanding the program in response to COVID-19 (Coronavirus). However, the SBA noted that businesses that produce or sell hemp and hemp-derived products may apply for such loans.

In the Weeds - The Fox Rothschild Cannabis Law Blog

An EIDL can provide low-interest financial assistance to a business that suffers substantial economic harm as a result of a federally-declared disaster. In the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020, Congress included provisions allowing the SBA to provide EIDLs to businesses affected by the Coronavirus, and President Trump announced that he authorized the SBA to offer an additional $50 billion of such loans.

As a testament to the fast-paced environment in which businesses and government find themselves in the wake of the Coronavirus, the “announcement” came in the form of tweets from the SBA’s Pacific Northwest division:

Greg Hubly@GHubly

Are cannabis companies eligible?

SBA Pacific NW

✔@SBAPacificNW

With the exception of businesses that produce or sell hemp and hemp-derived products (Agriculture Improvement Act of 2018, Public Law 115-334), marijuana-related businesses are not eligible for SBA-funded services (OMB, 2 C.F.R. § 200.300).

See SBA Pacific NW’s other Tweets

When asked to provide their reasoning, the SBA pointed to the federal prohibition on marijuana:

Free Kurtis Hanna@CaptainKurtis

Can you explain what in OMB, 2 C.F.R. § 200.300 specifically prevents marijuana-related businesses from being eligible for SBA-funded services?

SBA Pacific NW

✔@SBAPacificNW

Sure. It says “to ensure that federal funding is expended and associated programs are implemented in full accordance with U.S. statutory and public policy requirements.” In short, it’s because marijuana is not federally legal & SBA is a federal agency. (1/2)

See SBA Pacific NW’s other Tweets

Given the federal government’s stance on marijuana, this policy seems unlikely to change. However, additional developments or a more formal announcement from the SBA could shed light on  more nuanced situations (for example, a parent company that does not “touch the plant” or an entity that produces both cannabis and hemp products). We will continue to keep apprised of any developments from the SBA. Stay tuned…


Every business and individual has been or will be impacted by the 2019 novel Coronavirus that causes the disease known as COVID-19. The legal questions and concerns raised by this ongoing, widespread and unpredictable crisis are changing day to day. Fox attorneys are closely monitoring the legal and regulatory landscape to provide our clients with useful information to assist in their plans. For more information, see Fox Rothschild’s Coronavirus Resource Page.

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