Late last month, the federal government passed a $2.2 trillion package to keep the economy from sinking into a recession in the wake of COVID-19. Currently, there are stimulus package dollars being offered at the state, local, and federal levels. But what access does the cannabis industry have to these resources for economic assistance?
Let’s start with the federal level. The Small Business Administration (SBA) made it eminently clear that if your business is violating federal law (which marijuana business owners and supply chain operators are) you are ineligible for funds. Now, as an added kicker, regardless of whether you are an eligible business or not, it was announced on April 16th, that the SBA funds had run dry.
Marijuana Businesses Deemed Essential
Despite marijuana businesses being deemed essential, the ineligibility for financial relief puts them in a very difficult position. This sentiment was echoed in a letter written by Colorado Governor Jared Polis, who acknowledged the marijuana industry’s large contribution to Colorado’s economy. There is a clear misalignment here. We are deeming these businesses as essential but hanging them out to dry.
Now, let’s look at the other side of the cannabis industry – industrial hemp. These businesses are eligible and this is worth celebrating. This is what we fought for in the language of the 2018 Farm Bill. The fruits of our labors have paid off, now that in the wake of COVID-19, hemp businesses qualify for SBA loans.
CBD Businesses Aren’t Acting With FDA Oversight
Now I don’t want to raise an alarm, but I do want to raise an idea here. CBD businesses aren’t acting with FDA oversight. They can’t be in compliance with the FDA, because CBD regulations don’t exist. Isn’t it possible that someone at the SBA processing an application for a CBD company may think that it is engaging in unlawful business? We want to make sure when Hoban Law Group clients apply for these funds, they make that distinction as readily as possible. More than likely, many issues will arise here, as the line between these two industries is very thin in the minds of many people.
As we look at state and local stimulus packages, we see less distinction being made between marijuana and hemp businesses or what’s legal and what’s not under federal law. In fact, if you take Florida and Colorado as an example, marijuana-related businesses may qualify for state relief funds because those businesses are legal and compliant with state law.
But there’s a more critical point to raise here. While access to stimulus dollars is a necessary lifeline available to some cannabusinesses, there is another path that may prove more fruitful.
That is the need for collaboration, and cooperation, if you will.
Cannabusinesses Structure for Long Term Success
This is the key for how most cannabusinesses can structure themselves for long-term success in a post-COVID world. At the end of the day, it doesn’t matter that you were strong going prior to this pandemic. It doesn’t matter that you were on target to reach sales goals or to be acquired or merge with another company before this pandemic struck.
To stay afloat, you need to shift your perspective and find the people to stand shoulder-to-shoulder with. The best thing you can do right now is to stop, check your ego at the door, and pull out that document that you filed in a drawer a few years back – your business plan. Look at what your business plan objectives were and understand that the only way you’re going to get from point A to point Z is through partnership and collaboration.
This is the time to diversify your product offerings. If you’re a CBD company, this looks like identifying other companies that offer distinct product lines that either compliment your offerings, help you build out your portfolio or create synergies with your operations.
On a personal note, I feel extrandorily grateful for our law firm. We’ve been on an upward trend for nearly 10 years. Frankly, it’s been uncanny. During this uncertain time, we are grateful to still be busy. We continue to be strong, and hope to assist our clients in maintaining their strength in this marketplace. But the best way we can do this, is to spread the message of helping yourself by exploring pathways for collaboration. There is a road between the dawn and dark of night, to find it, you just gotta poke around.