It is absolutely ridiculous that while cannabis has been deemed essential, no cannabis businesses have been given access to relief funds. Medicinal marijuana is as essential as any other medication prescribed by a doctor as many patients use cannabis to treat epilepsy, anxiety and insomnia. You can imagine how relieved I was to hear that something is finally being done to help rectify this situation for the companies and workers that are putting themselves at risk daily. A relief new bill was introduced yesterday calling for the fair and equal treatment of cannabis businesses during the COVID19 crisis. Reps. Earl Blumenauer (D-OR) and Ed Perlmutter (D-CO) just introduced the in the House of Representatives.
Currently, no cannabis related businesses can access the U.S. Small Business Administration (SBA) low-interest loans for disaster assistance of up to $2 million or the $2 trillion stimulus package. Although these are tax-paying, state licensed businesses, the SBA does not allow them access due to outdated federal prohibition policies. The legislation that was proposed would resolve the situation during this pandemic and related economic downturn. Although we’re very fortunate cannabis has been deemed essential, it is absurd to make that designation and then withhold government emergency support that these businesses need to continue to make payroll and keep their doors open.
According to Aaron Smith of NCIA , despite reports of strong sales at dispensaries, the trickle-down impact of the virus is affecting a wide range of other verticals within the industry. Retailers and delivery services have seen an uptick in demand and are surviving because of their ability to continue servicing consumers and patients. Meanwhile, the companies that cultivate plants, manufacture infused products and provide other necessities and professional services have seen their own business take a severe hit during this crisis. As time progresses, the situation is only getting worse.
Although tremendously unfair, it’s not surprising, as unfair and unequal treatment is nothing new to our industry. Licensed cannabis businesses across the U.S. are unable to take the ordinary tax deductions afforded to other industries, leaving them with the burden of an effective tax rate that is two-to-three times higher than other legal businesses. Couple this with a lack of access to banks, loans and financial services, the inability to deduct business expenses due to Section 280E of the federal tax code, and you get an effective tax rate as high as 70%, according to a recent Bloomberg report.
What happens if legitimate cannabis businesses are forced to close their doors? We’ve already seen what can happen without affordable access to legal cannabis. This will push more consumers to the black market, which in recent months has been the catalyst of the vape crisis. What a perfect storm that would create. While at risk of COVID19 which attacks the lungs, cannabis consumers could be further compromised, risking lung damage by utilizing untested products.
Cannabis small businesses aren’t asking for special treatment. They only seek to be treated like all other job-generating, tax-paying companies in this country.
Talking points and instructions for calling your representatives are available on the NCIA website.