Despite ‘Essential’ Designation, Cannabis Industry Denied Stimulus Relief

The coronavirus pandemic is underscoring the stark contrasts between state and federal pot policies.

Northern California craft cannabis distributor Flow Kana has weathered its fair share of storms.

From the bumpy roll-out of California’s recreational adult-use two years ago to ongoing advocacy surrounding reduced tax rates to ensure the market’s survival, Michael Wheeler, VP of policy for Flow Kana, has been quite busy in his current post.

While taxes and regulatory issues continue to demand his focus, Wheeler must now also face the added challenge of a global health pandemic that has virtually every sector of the economy reeling. The blessing of being allowed to continue operating as an “essential” business isn’t lost on Flow Kana, but the realities imposed by the ongoing federal prohibition of cannabis are starting to add up in a hurry.

“We are very thankful that, in the state of California and in a number of other jurisdictions, we’ve been deemed essential,” Wheeler says. “That’s great. We can stay open and we can work to attract revenue. However, to not have access to any of the federal relief funds that are spelled out in the Payroll Protection Program or the CARES Act is very challenging.”

As the impact of the coronavirus continues to inspire careful scrutiny of our existing systems of commerce, equality, and labor, the incongruous status of cannabis as both essential and illegal has never felt more paradoxical. As Wheeler explains, companies like Flow Kana are not only being denied access to the loans and payroll relief made available by Congress in recent weeks. They are also fully expected to comply with things like the Family First Act, which directs businesses to provide payroll and leave of absence for any employees affected by COVID-19, directly or indirectly.

Wheeler also notes that lack of access to safe and reliable banking is further inhibiting the ability of cannabis businesses to secure loans or otherwise make financial arrangements to endure the length of ongoing “shelter-in-place” orders.

“I think that we likely do have enough support, both from Republicans and Democrats, in the Senate to allow for banking access to happen,” he says. “The question is whether we will be able to separate cannabis stigmas from common sense policy actions that will result in revenue, jobs, taxes — all legal business activity. All of that comes from giving us access to some of the stimulus and the relief, as well as giving us access to banking.”

For Ryan Hudson, CEO and co-founder of The Apothecarium, with three locations in San Francisco, another concern is how the pandemic is affecting supply chains.

“Many of the cannabis businesses that supply the products we sell at The Apothecarium are struggling,” Hudson says. “These are local employers with workers who depend on them for their livelihood and customers who depend on them for their medicine.”

At Apothecarium, Hudson and his staff are doing their best to adjust to their new role as an essential service in the midst of a public health crisis. That includes the recent re-launch of the brand’s cash-only delivery service, which is now available daily from 9 a.m. to 8 p.m. While Hudson is doing his best to take care of his own, he wonders why Congress hasn’t done the same for the cannabis industry as a whole.

“Congress is supporting other employers,” Hudson says. “If they don’t do the same for cannabis companies, many will go out of business and take good jobs with them.”

Speaking pragmatically on the issue, Josh Drayton of the California Cannabis Industry Association (CCIA) suggests that recent news of Nancy Pelosi’s intentions to support safe banking access for weed companies should not be mistaken for a miracle.

“The industry has been completely shut out of all federal relief efforts recently approved by Congress,” Drayton, CCIA’s Director of Communication and Outreach, explains. “Absent some form of economic and regulatory relief, the regulated cannabis industry’s ability to navigate this crisis is uncertain.”

Though progress is but one of several outcomes that await the cannabis industry as the economic toll of the coronavirus outbreak continues to rise, the prospect of Congress agreeing to offer aid would amount to a major victory in the decades-long battle to make marijuana federally legal.

It is that goal and that goal alone, Drayton argues, that will ensure such disparities as the one legalized U.S. cannabis markets now face, go up in smoke for good.

“While California’s cannabis industry is poised to be a significant contributor to job creation and can add economic stability to the state once this pandemic reaches an end,” Drayton says, “this potential will only be realized when the long-standing institutional barriers, which continue to hinder the economic viability of the industry, are removed and responsible growth of the cannabis industry is realized.”

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