On January 15, 2021, the United States Department of Agriculture (“USDA”) published its final rule (the “Final Rule”) regulating the production of industrial hemp under the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”). The Final Rule modifies regulations set forth in the interim final rule published on October 31, 2019 (the “Interim Rule”). The modifications are based on approximately 5,900 public comments submitted to the USDA over three public comment periods.

The Final Rule contains the following key provisions:

  • Harvest Window– Producers now have up to 30 days after collecting samples to harvest the crop.
  • Sampling Method – States and Indian Tribes may now implement “performance-based” sampling requirements. States and Indian Tribes are required to submit their “performance-based” plans to the USDA for approval to ensure that, at a confidence level of 95 percent, no more than one percent (1%) of the plants in a lot will exceed the “acceptable hemp THC level.” [i] Importantly, hemp that is produced for research is not subject to the same sampling requirements so long as the producer adopts and follows an alternative sampling method that has the potential to ensure that the plant will not test above the acceptable THC level.
  • Location of Samples – Although samples cannot be taken from the “whole plant,” the Final Rule provides greater flexibility for producers by modifying the sampling requirements to state that the sample shall be approximately five to eight inches from the “main stem” (that includes the leaves and flowers), “terminal bud” (that occurs at the end of a stem), or “central cola” (cut stem that could develop into a bud) of the flowering top of the plant.
  • Disposal and Remediation of “Hot” Hemp – Producers no longer need to use a DEA-registered reverse distributor or duly authorized Federal, State, Tribal, or local law enforcement officer to dispose of non-compliant plants, commonly referred to as “hot” hemp. The Final Rule incorporates additional disposal methods including options such as plowing under non-compliant plants, composting into “green manure” for use on the same land, tilling, disking, burial, or burning the crop.
  • Testing Using DEA-Registered Laboratories – Due to the limited number of DEA-registered laboratories, the Drug Enforcement Administration (“DEA”) is allowing non-DEA registered labs to continue to test hemp until January 1, 2022.  
  • Negligent Violations – The Final Rule increases the negligence threshold from 0.5 to 1.0 percent THC and clarifies how States and Indian Tribes determine when to suspend or revoke a producer’s license. As a result, producers do not commit a negligent violation if they produce plants that exceed the “acceptable hemp THC level” and use “reasonable efforts” to grow hemp and the plant does not have a THC concentration of more than 1.0 percent on a dry weight basis. However, producers are limited to no more than one (1) violation per calendar year.
  • Extent of Tribal Regulatory Authority over the Territory of the Indian Tribe – Tribes are explicitly authorized to exercise jurisdiction, and accompanying regulatory authority, over the production of hemp throughout its territory regardless of the extent of its inherent regulatory authority.

The Final Rule becomes effective on March 22, 2021.

WHAT DOES THIS MEAN FOR YOUR BUSINESS?

The Final Rule aligns with may of the public comments submitted by industry stakeholders and effectively provides producers with more practical interpretations of the 2018 Farm Bill, including  a broader harvest window and additional disposal methods for “hot” hemp. Despite the many beneficial revisions incorporated in the Final Rule, producers must remain vigilant by monitoring ever-evolving USDA and DEA guidance to ensure compliance with the 2018 Farm Bill.  For the industry to truly prosper, further tweaks and substantive modifications to these rules will be necessary as the industry continues to expand.

For more information contact Steve Levine, Megan Herr, or your Husch Blackwell attorney.

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[i] Acceptable hemp THC level: When a laboratory tests a sample, it must report the total delta-9 tetrahydrocannabinol content concentration level on a dry weight basis and the measurement of uncertainty. The acceptable hemp THC level for the purpose of compliance with the requirements of State or Tribal hemp plans or the USDA hemp plan is when the application of the measurement of uncertainty to the reported total delta-9 tetrahydrocannabinol content concentration level on a dry weight basis produces a distribution or range that includes 0.3 percent or less. For example, if the reported total delta-9 tetrahydrocannabinol content concentration level on a dry weight basis is 0.35 percent and the measurement of uncertainty is ±0.06 percent, the measured total delta-9 tetrahydrocannabinol content concentration level on a dry weight basis for this sample ranges from 0.29 percent to 0.41 percent. Because 0.3 percent is within the distribution or range, the sample is within the acceptable hemp THC level for the purpose of plan compliance. This definition of “acceptable hemp THC level” affects neither the statutory definition of hemp, 7 U.S.C. 1639o(1), in the 2018 Farm Bill nor the definition of “marihuana,” 21 U.S.C. 802(16), in the CSA.

Please note that this definition affects neither the statutory definition of hemp, 7 U.S.C. 1639o(1), in the 2018 Farm Bill nor the definition of “marihuana,” 21 U.S.C. 802(16), in the CSA.

Earlier this year the City of Denver Department of Excise and Licenses created the Marijuana Licensing Work Group (the “MLWG”). This week the MLWG released draft legislation regarding a continued license cap, licensing categories, and Social Equity Applicants. If passed the legislation would have some noteworthy impacts.

  • The draft bill would extend the current licensing cap that was enacted in 2016 until July 1, 2027 and include additional license categories with some limited exceptions. The revised moratorium creates an exception that would reserve new licenses in most categories, including stores and cultivations, for Social Equity Applicants until 2027.
  • A Social Equity Applicant under the draft legislation must be a person or business that is at least fifty-one percent (51%) owned by individuals that:
    • are a Colorado resident;
    • Have not been the beneficial owner of a revoked marijuana business license that can demonstrate one of the below criteria:
      • The applicant has resided for at least fifteen (15) years between the years 1980 and 2010 in a census tract designated by the Colorado Office of Economic Development \ and International Trade as an opportunity zone or designated by the state licensing authority as a disproportionately impacted area;
      • The applicant or the applicant’s parent, legal guardian, sibling, spouse, child, or minor in their guardianship was arrested for a marijuana offense, convicted of a marijuana offense, or was subject to civil asset forfeiture related to a marijuana investigation; or
      • The applicant’s household income in the year prior to application did not exceed an amount determined by the state licensing authority.
  • One specific privilege that would be reserved for Social Equity Applicants until 2024 would be medical and retail marijuana delivery. The draft ordinance authorizes delivery permits for licensed transporters, medical marijuana centers and retail stores. However, prior to July 1, 2024, only medical or retail transporters that also qualify as social equity applicants may participate in delivery. On or after July 1, 2024, medical or retail marijuana transporters as well as medical and retail marijuana stores holding a valid license and a delivery permit issued by the City of Denver may also conduct deliveries.
  • All licensees will need to develop a social impact plan that will be publicly available.
  • The draft bill to enact the Marijuana Hospitality Program would allow marijuana hospitality licenses to be available starting July 2021 for both social equity and non-social equity applicants. Hospitality businesses would be permitted to sell medical and retail marijuana as well as marijuana products while permitting on-site consumption. The consumption of alcohol and tobacco on the licensed premises would be prohibited. Medical hospitality licenses would be permitted to operate from both fixed and mobile locations. Simultaneously, the previous Cannabis Consumption Pilot Program will be repealed. Current consumption licensees would be issued hospitality licenses.
  • Under the proposed legislation, while completing a change of location a licensee may operate at both the new location and former location if the licensee holds a permit from the state licensing authority.

The MLWG is accepting comments on the draft legislation through January 4, 2021 and will be holding shareholder feedback sessions on Tuesday, December 15, 2020 from 2-4 pm and on Thursday, December 17, 2020 from 9-11:30 am. If you would like more information on how this legislation impacts your business or on submitting comments contact Steve Levine, Alyssa Samuel, or your Husch Blackwell attorney.

cannabis oil and hemp  On Friday, December 4, 2020 the US House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act of 2019 (the “MORE Act”), which would effectively legalize cannabis by removing marijuana from the Controlled Substances Act. The bill (H.R. 3884) has several key components.

  • Most importantly, the bill would remove cannabis from the list of controlled substances in the Controlled Substances Act, as well as other federal legislation such as the National Forest System Drug Control Act of 1986. This would effectively end many of the obstacles created by the federal illegality of cannabis such as the lack of access to banking, tax consequences such as 280E, adverse immigration impacts, and threats of federal criminal enforcement.
  • Second, not only does the bill preclude future prosecution for marijuana related crimes, the bill is designed to be retroactive and would provide for the expungement of past non-violent marijuana offenses.
  • The bill creates a prescribed excise tax on marijuana and marijuana products. The funds collected from the taxes would be channeled into opportunity and reinvestment programs.
  • A Community Reinvestment Grant Program would be established aimed at the provision of services for “individuals most adversely impacted by the War on Drugs,” such as job training, education, literacy programs, mentoring, and substance use treatment programs;
  • A Cannabis Opportunity Program would be established providing state funds for small business loans in the cannabis industry targeted at social equity candidates; and
  • An Equitable Licensing Grant Program providing funds for states to implement equitable cannabis licensing programs aimed at minimizing “barriers to cannabis licensing and employment for individuals most adversely impacted by the War on Drugs.”
  • The bill would require all cannabis producers to obtain a federal permit. Cannabis businesses would need to be licensed at the state, local, and federal levels to operate.

This MORE Act is a substantial step in cannabis legislation. Reactions to the proposed legislation have been mixed. While the bill does include some measures aimed at social equity, critics of the bill claim it does not go far enough. Similarly, while the bill includes a federal permitting provision, this would be the beginning of a nascent federal regulatory scheme.

WHAT DOES THIS MEAN FOR YOUR BUSINESS?

While this bill passed in the US House of Representatives, it would still need to pass in the U.S. Senate this term, which by most accounts does not seem likely. However, the passage of this bill signifies the progress that has been made and provides insight on what further legislation may look like. For more information contact Alyssa Samuel, Steve Levine, or your Husch Blackwell attorney.

Husch Blackwell’s Labor & Employment team issued a legal alert containing guidelines for employers as more states legalize marijuana. Employers should review the state laws in the jurisdictions in which they operate, understand their rights, and consider adopting the practices outlined in the update by Timothy Hilton and Jenna Brofsky.

As a historic election here in the United States unfolds beyond Election Day, one thing is certain – marijuana continues to win – and win decisively. While notable races in several states and counties were too close to call at the end of Election Night, marijuana state ballot initiatives were called early. All five states with marijuana on the ballot passed their various measures. Read more in yesterday’s legal alert by Husch Blackwell’s Steve Levine and Meghan Brennan.

A businesswoman selecting a Patent business concept on a futuristic portable computer screen.

In an article published in Marijuana Venture, Husch Blackwell attorneys Nicole Bashor, Steve Levine and Matt Kamps analyze cannabis-centric patent data to see if patents and applications are continuing the rising trend. They also discuss how the current political landscape and the global health crisis could impact the cannabis industry. Read more in “Innovation on the Rise.”

On August 20, 2020, the Drug Enforcement Administration (“DEA”) published an Interim Final Rule on industrial hemp and hemp derivatives (the “Interim Rule”), which immediately went into effect, to conform DEA regulations with the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”).

As we previously discussed, the 2018 Farm Bill effectively removed industrial hemp from the definition of “marijuana” in the Controlled Substances Act (CSA). Additionally, tetrahydrocannabinols contained in industrial hemp, such as Cannabidiol (commonly known as CBD), were also removed from the purview of the CSA.

Continue Reading The DEA’s Interim Final Rule and its Impact on the Industrial Hemp Industry

In our previous posts,[1] we discussed why state-legal medical and recreational marijuana businesses are likely not eligible to receive federal financial assistance under the Paycheck Protection Program due to the fact that these businesses are inherently engaged in federally illegal activities.

While our view has not necessarily changed, this post is intended to highlight the implications of a recent temporary restraining order prohibiting the U.S. Small Business Administration (“SBA”) from excluding strip clubs from receiving financial relief under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act” or the “Act”).

The Case for Strip Clubs to Receive SBA Assistance

The Facts

Last month, DV Diamond Club of Flint LLC (d/b/a Little Darlings) sued the SBA in the U.S. District Court for the Eastern District of Michigan claiming, among other things, that the agency exceeded its authority under the CARES Act by excluding otherwise eligible strip clubs from receiving Paycheck Protection Program (“PPP”) loans.

On April 6, 2020, Little Darlings, an adult entertainment establishment licensed in Flint, Michigan, applied for a PPP loan to mitigate its business losses as a result of the COVID-19 pandemic.

Due to rapidly diminishing PPP funds and the rejection of applications submitted by other seemingly eligible adult entertainment establishments, Little Darlings filed a claim against the SBA alleging that the agency’s April 15, 2020 “Business Loan Program Temporary Changes; Paycheck Protection Program “ Rule (the “Interim Rule”) exceeded the SBA and Department of Treasury’s regulatory authority under the CARES Act.

The Interim Rule, in part, provided that:

“Businesses that are not eligible for PPP loans are identified in 13 CFR 120.110 and described further in SBA’s Standard Operating Procedure (SOP) 50 10, Subpart B, Chapter 2,[2] except that nonprofit organizations authorized under the Act are eligible.” (emphasis added)[3]

The Interim Rule effectively clarified that those businesses that “are identified” in 13 C.F.R. § 120.110 (the “Ineligibility Rule”) and “described further” in Standard Operating Procedure 50 10 5(K)[4]  are “not eligible for PPP loans.”

The Ineligibility Rule – 13 C.F.R. §120.110

In 1996, the SBA declared that certain types of businesses are not eligible to participate in SBA lending programs. Under the Ineligibility Rule (codified at 13 CFR § 120.110), certain sexually oriented businesses[5] and “businesses engaged in any illegal activity, [6]” in addition to other enumerated businesses, were barred from receiving SBA financial assistance.

The SOP

In 2019, the SBA issued “Standard Operating Procedure for Lender and Development Company Loan Programs 50 10 5(K)” (the “SOP”) providing guidance to lenders regarding how to administer the Ineligibility Rule. The SOP explained that certain business types such as “Businesses Providing Prurient Sexual Material”[i] and “Businesses Engaged in any Illegal Activity,[ii]” among others, may be “ineligible” to participate in SBA programs.[7]

The Argument

In addition to arguing that the SBA’s regulations violated Little Darlings’ Constitutional rights under the First and Fifth Amendments, Little Darlings alleged that the SBA lacked authority to promulgate regulations clarifying what businesses were eligible for PPP loans, as Congress intended to “increase eligibility” for PPP loans under the CARES Act by establishing only two criteria for PPP eligibility. Moreover, Little Darlings relied on the fact that Congress explicitly  provided that “any business concern . . .  shall be eligible” for a PPP loan if it met the criteria identified in 15 U.S.C. § 636(a)(36)(D)(i) of the CARES Act.

As a result, Little Darlings sought a Temporary Restraining Order (TRO), Preliminary, and Permanent Injunction enjoining the SBA from enforcing or utilizing the Ineligibility Rule or SOP to exclude otherwise eligible PPP loan applicants. As part of the orders, the SBA would be required to immediately notify all SBA lending banks to immediately discontinue utilizing 13 CFR § 120.110 or the SOP as criteria for determining PPP eligibility and to process all PPP loan applications without reference to such regulations and procedures.

On May 11, 2020, U.S. District Judge, Matthew Leitman, granted Little Darlings’ TRO blocking the SBA from enforcing the Ineligibility Rule and SOP finding that Congress intended to provide temporary paycheck support to “all Americans employed by all small businesses that satisfied the two eligibility requirements – even businesses that may have been disfavored during normal times.” [8]

Notably, the Sixth Circuit refused to overturn the TRO reasoning that withholding loans from previously “ineligible” businesses, such as strip clubs, conflicts with the broad interpretation of the CARES Act.

Similar cases have also been brought in Illinois and Wisconsin on behalf of adult entertainment businesses who have been denied PPP relief. Notably, on April 23, 2020, the U.S. District Court for the Eastern District of Wisconsin issued a comparable injunction blocking the SBA from denying federal financial assistance to multiple Wisconsin gentlemen clubs.

 Implications for Marijuana Businesses

As we previously discussed,[9] one of the largest hurdles for marijuana businesses to receive federal financial assistance from the SBA is that applicants must make a good faith certification that they are not engaged in any federally illegal activity.[10]

The SBA has historically relied on both the Ineligibility Rule and SOP to uphold its position that “illegal activities” include both Direct Marijuana Businesses[iii] and Indirect Marijuana Businesses[iv] that “make, sell, service, or distribute products or services used in connection with illegal activity.”[11]

However, should Judge Leitman’s interpretation hold true and continue to prohibit the SBA from utilizing the Ineligibility Rule or the SOP as criteria for determining PPP eligibility, marijuana businesses (namely Indirect Marijuana Businesses[12]) may be eligible to receive PPP loans so long as they satisfy the eligibility requirements identified in the CARES Act.

Although it would ordinarily be absurd to conclude that Congress intended to provide financial assistance to businesses operating in clear violation of federal law (such as direct marijuana business), the U.S. District Court for the Eastern District of Michigan and the Sixth Circuit have concluded that the expansive definition of “any business concern” in the CARES Act is not subject to SBA limitations.

As Judge Leitman elaborated in his May 11, 2020 order:

“Congress’s decision to expand funding to previously ineligible businesses is not an endorsement or approval of those businesses. Instead, it is a recognition that in the midst of this crisis, the workers at those businesses have no viable alternative options for employment in other, favored lines of work and desperately need help. It is not absurd to conclude that in order to support these workers, Congress temporarily permitted previously excluded businesses to obtain SBA financial assistance.”

Therefore, although we believe it to be highly unlikely that marijuana businesses will actually receive PPP loans due to their continued violation of the Controlled Substances Act (“CSA”) and need to make a good faith certification that they are not engaged in any federally illegal activity, the door has been opened for certain marijuana businesses to potentially receive PPP loans should the SBA remain prohibited from relying on the Ineligibility Rule or SOP to disqualify otherwise eligible applicants.

 Contact Us

To learn more about the impact of the COVID-19 outbreak on your cannabis businesses, please contact Steve Levine, Megan Herr or your Husch Blackwell attorney.

Husch Blackwell will continue to provide updates upon additional information. Husch Blackwell has launched a COVID-19 response team providing insight to businesses as they address challenges related to the coronavirus outbreak. The page contains programming and content to assist Colorado Marijuana Industry clients and other interested parties across multiple areas of operations, including labor and employment, retailing, and supply chain management, among others.

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[1] https://www.cannabislawnow.com/2020/03/cares-act-stimulus-package-wont-aid-the-marijuana-industry/

https://www.cannabislawnow.com/2020/04/marijuana-businesses-harmed-by-covid-19-remain-ineligible-to-receive-federal-financial-assistance/

[2] https://www.sba.gov/document/sop-50-10-5-lender-development-company-loan-programs

[3] See Interim Rule, p. 2812

[4] https://www.sba.gov/sites/default/files/2019-02/SOP%2050%2010%205%28K%29%20FINAL%202.15.19%20SECURED%20copy%20paste.pdf

[5] 12 C.F.R. § 120.110(p) Businesses which: (1) Present live performances of a prurient sexual nature; or (2) Derive directly or indirectly more than de minimis gross revenue though the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature

[6] 12 C.F.R. § 120.110(h) Businesses engaged in any illegal activity.

[7] See the 2019 SOP, ECF No. 12-11, PageID.570

[8] Specifically, U.S. District Judge Matthew F. Leitman reasoned that:

“While Congress may have once been willing to permit the SBA to exclude these businesses from its … lending programs, that willingness evaporated when the COVID-19 pandemic destroyed the economy and threw tens of millions of Americans out of work…”

In response to the SBA’s argument that such an interpretation would lead to “absurd results,” Judge Leitman stated:

“[T]hese are no ordinary times, and the PPP is no ordinary legislation. The COVID-19 pandemic has decimated the country’s economy, and the PPP is an unprecedented effort to undo that financial ruin.”

[9] https://www.cannabislawnow.com/2020/04/marijuana-businesses-harmed-by-covid-19-remain-ineligible-to-receive-federal-financial-assistance/

[10] See Borrower Application Form, page 2; see also COVID-19 Economic Injury Disaster Loan Application

[11] See SOP 50 105(K) at Ch. 2(III)(A)(8).

[12] It is our position that Indirect Marijuana Businesses (or non plant-touching businesses that service state licensed marijuana establishments) will have an easier time alleging that they are not operating in violation of federal law than those businesses whose existence is inherently premised on cultivating and distributing marijuana in violation of the Controlled Substances Act

[i] 15. Businesses Providing Prurient Sexual Material (13 CFR § 120.110(p))

  1. A business is not eligible for SBA assistance if:
  2. It presents live or recorded performances of a prurient sexual nature; or
  3. It derives more than 5% of its gross revenue, directly or indirectly, through the sale  of  products,  services  or  the presentation  of  any  depictions  or  displays  of  a  prurient sexual nature.
  4. SBA has  determined  that  financing  lawful  activities  of  a prurient sexual nature is not in the public interest. The Lender must  consider  whether  the  nature  and  extent  of  the  sexual component causes the business activity to be prurient.

[ii] 8. Businesses Engaged in any Illegal Activity (13 CFR § 120.110(h))

  1. SBA must not approve loans to Applicants that are engaged in illegal activity under federal, state, or local law. This includes Applicants that make, sell, service, or distribute products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the Applicant’s intended market.
  2. Marijuana-Related Businesses:
  3. Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.

[iii] “Direct Marijuana Business” mean “a business that grows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity. This applies to recreational use and medical use even if the business is legal under local or state law where the applicant business is or will be located.”

[iv] “Indirect Marijuana Business” means “a business that derived any of its gross revenue for the previous year (or, if a start-up, projects to derive any of its gross revenue for the next year) from sales to Direct Marijuana Businesses of products or services that could reasonably be determined to aid in the use, growth, enhancement or other development of marijuana. Examples of Indirect Marijuana Businesses include businesses that provide testing services, or sell or install grow lights, hydroponic or other specialized equipment, to one or more Direct Marijuana Businesses; and businesses that advise or counsel Direct Marijuana Businesses on the specific legal, financial/ accounting, policy, regulatory or other issues associated with establishing, promoting, or operating a Direct Marijuana Business. However … [the] SBA does not consider a plumber who fixes a sink for a Direct Marijuana Business or a tech support company that repairs a laptop for such a business to be aiding in the use, growth, enhancement or other development of marijuana. Indirect Marijuana Businesses also include businesses that sell smoking devices, pipes, bongs, inhalants, or other products if the products are primarily intended or designed for marijuana use or if the business markets the products for such use.”

bright green marijuana plant

On Thursday April 23, 2020, Representatives Earl Blumenauer (D-OR) and Ed Perlmutter (D-CO) introduced the “Emergency Cannabis Small Business Health and Safety Act” in the House. Blumenauer and Perlmutter have been influential in protecting state-legal marijuana businesses from federal interference, most recently under the 2020 federal appropriations rider.

If passed, the Act would allow state-legal medical and recreational marijuana businesses to take advantage of the multi-trillion dollar stimulus packages designed to help small businesses harmed by COVID-19.

As we previously discussed,[1] marijuana businesses harmed by COVID-19 remain ineligible to receive federal financial assistance due to their engagement in “federally illegal” activities. Consequently, marijuana businesses cannot receive assistance from the Small Business Administration (“SBA”) thereby making them ineligible to receive Paycheck Protection Program (“PPP”) loans and other SBA financial assistance, including Economic Injury Disaster Loans (“EIDLs”), traditional 7(a) loans, 504 loans, and microloans.

To provide the industry with much needed economic relief, the legislation states that marijuana businesses would no longer be prohibited from (i) participating in the PPP, (ii) receiving EIDL loans, or (iii) receiving emergency EIDL grants purely on the basis that the business is a “cannabis-related legitimate business” [2] or “service provider.”[3]

Additionally, the Act clarifies that the SBA and its officers, directors, and employees would “not be held liable pursuant to any Federal law or regulation solely for providing a loan or a loan guarantee to a cannabis-related legitimate business or a service provider.”

Even though states have varied in their approach to continue medical and retail marijuana operations amid the coronavirus outbreak, a majority of states that allow some form of sale and consumption of marijuana have designated the cannabis industry as “essential” and open for operation. [4] Some states have gone as far as allowing home delivery, curbside pick-up, and telemedicine consultations.

Nonetheless, despite the cannabis industry’s designation as “essential,” marijuana businesses (including those who service the marijuana industry) will continue to be precluded from receiving federal financial assistance until the Emergency Cannabis Small Business Health and Safety Act, or similar legislation, is passed.  It is important to note that, even if passed, the Emergency Cannabis Small Business Health and Safety Act would likely provide little relief, as the majority of the funds to be administered by the SBA have already been accounted for.

What does this mean to you?

Although the COVID-19 pandemic has highlighted the need for the heavily-taxed and financially burdened marijuana industry to receive assistance under the stimulus packages, the Act, even if passed by Congress, faces an uphill battle in the Republican-held Senate.

Contact Us

To learn more about the impact of the COVID-19 outbreak on your cannabis businesses, please contact Steve Levine, Meghan Brennan,  Megan Herr or your Husch Blackwell attorney.

Husch Blackwell will continue to provide updates upon additional information. Husch Blackwell has launched a COVID-19 response team providing insight to businesses as they address challenges related to the coronavirus outbreak. The page contains programming and content to assist Colorado Marijuana Industry clients and other interested parties across multiple areas of operations, including labor and employment, retailing, and supply chain management, among others.

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[1] Marijuana Businesses Harmed By COVID-19 Remain Ineligible To Receive Federal Financial Assistance

CARES Act – Stimulus Package Won’t Aid the Marijuana Industry

[2] The term “cannabis-related legitimate business” means a manufacturer, producer, or any person that – (A) engages in any activity described in subparagraph (B) pursuant to a law established by a State or a political subdivision of a State, as determined by such State or political subdivision; and (B) participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.”

[3] The term “service provider” (A) means a business, organization, or other person that – (i) sells goods or services to a cannabis-related legitimate business; or (ii) provides any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to cannabis; and (B) does not include a business, organization, or other person that participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.”

[4] State-by-State COVID-19 Announcements Impacting Marijuana Businesses.