Cannabis Companies Receive Government Aid in COVID-19 Pandemic
Posted by Lori Ann Reese on 07/15/2020 in COVID-19
Updated on May 13, 2021.
Medical content reviewed by Dr. Joseph Rosado, MD, M.B.A, Chief Medical Officer
Some ancillary medical cannabis companies received government aid, which was a surprise to the industry as the funds were allocated federally. The Federal Government does not typically provide funding to the medical cannabis industry because medical cannabis remains a prohibited drug in Schedule I. This is also the reason why medical cannabis research in the United States is stifled, as federal grants for R&D are not provided to the industry.
The importance of medical cannabis for the treatment of chronic health conditions was supported by the designation of the industry as an essential service by many states at the onset of the COVID-19 health emergency this year. This move not only legitimized the value of therapeutic medical cannabis for patients but also recognized the impact of restricting medical marijuana to patients qualified to use it for compassionate care.
Cannabis companies and businesses are required to pay federal taxes on their revenues, even while they are not entitled to many of the benefits, loans, financial support provided to other industries in the United States.
Why Do Medical Cannabis Businesses Need Support During COVID-19?
There are many challenges that licensed medical marijuana dispensaries and ancillary businesses essential to production, distribution, and sale of cannabis products to patients have faced through the first quarter of 2020. When the full scope of the duration of COVID-19 was realized, the medical cannabis industry and affiliated services and agricultural producers had to make an agile shift to ensure that the supply of cannabis to patients was not interrupted. The rise of medical cannabis usage during this time meant urgent action was needed.
One of the first and most obvious challenges was how to continue the production, distribution, and manufacturing of cannabis products. New social distancing and preventative health measures requirements radically changed both procedures and increased expenses for ancillary cannabis businesses. Labor shortages have been a common problem, as employees have required quarantine procedures.
Another big shift for medical cannabis retailers (because of social distancing and safety needs) was the move toward “herb side pick-up” by patients who did not want to enter stores to purchase medical cannabis supplies and products. Home delivery also became an ‘essential service’ because of quarantine measures. Temporary laws were enacted in legalized states to allow patients to accept safe delivery at home.
The third consideration for all retail and ancillary medical marijuana businesses, was an expansion of clinical sterilization processes in cultivation, production, and manufacturing, to minimize infection risks for employees and customers.
Which Cannabis Businesses Received Government Aid?
According to an article on MarketWatch, cannabis businesses in the United States were just as impacted (if not, more so) than many other industries and sectors in the country. Stimulus funds received from the Federal Government in 2020 will be applied for expense support, such as rent, mortgage, utilities. These funds are allocated to help businesses cover the cost of payroll to keep Americans employed through the COVID-19 pandemic.
The following ancillary (non-cultivating or retail dispensary) businesses received government stimulus payments:
- The ArcView Group, a cannabis investment research firm, was authorized for $150,000 to $350,000 in financial support.
- Canna Advisors received approval for $150,000 to $350,000 stimulus support.
- Anne Holland Ventures (Marijuana Business Daily) received a stimulus approval of $1 million to $2 million dollars.
- Hemp Temps, which provides hemp and marijuana temporary labor and staffing resources to the industry, was approved for $350,000 to $1 million in stimulus payments.
One key factor, discussed by industry insiders, is detrimental to the approval process from the U.S. Small Business Administration. The business can not directly receive operational revenue through the production or sale of medical cannabis. Service-related ancillary businesses in the marijuana industry may continue to qualify for financial support through the stimulus program.
This article was originally published by Marijuana Business Daily.
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