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Financial Assistance and Resources for Cannabis Companies During Coronavirus Pandemic

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Financial Assistance and Resources for Cannabis Companies During Coronavirus Pandemic

By: Heidi Urness, Attorney at Heidi Urness Law, PLLC

While individuals and businesses throughout the country are clamoring to secure their piece of disaster relief funds, marijuana businesses find themselves excluded from federal aid opportunities. However, state and local governments are stepping up to fill in the gaps and help companies stay afloat during the coronavirus pandemic.

I.   Marijuana Businesses Are Not Eligible For Federal Small Business Administration Loans.

Among the disaster assistance being made available over the last several weeks, are low-interest (maximum 3.75 percent), fixed-rate loans assessed and allotted by the federal Small Business Administration (“SBA”). On March 11, 2020, President Trump authorized the issuance of these loans to help small business stay afloat while suffering economic loss (such as ongoing expenses, including payroll) during the coronavirus pandemic.

The SBA began making working loans available to help “small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster.” These loans are intended to assist through the disaster recovery period, and are limited to $2,000,000 per recipient ($7 billion in total relief is available) based on the economic injury suffered by the business as determined by the SBA (but which cap can be waived by the SBA if a business is a “major source of employment”).

However, on Monday, the SBA confirmed via a post on social media that marijuana businesses are not eligible for these loans. (See also, 2 CFR § 200.300.) As Carol Chastang, SBA public affairs specialist, told Cannabis Business Times: “Businesses that aren’t eligible include marijuana growers and dispensers, businesses that sell cannabis products, etc., even if the business is legal under local or state law.”

In short, marijuana business may not avail themselves of these disaster-loans “because federal law prohibits the sale and distribution of cannabis, the SBA does not provide financial assistance to businesses that are illegal under federal law,” explains Ms. Chastang. The federal (Schedule I) prohibition of marijuana has caused, and continues to cause, incredible disruptions in the legal cannabis industry – particularly with respect to corporate banking and funding.

II.   Hemp Businesses Are Eligible for Federal Small Business Administration Loans.

Hemp and hemp-based companies, however, are eligible for such SBA loans. Pursuant to the Agriculture Improvement Act of 2018, Public Law 115-334 (effective through 2023), and confirmed by the SBA, companies which produce or sell hemp and hemp-derived products are exempt from the applicable federal prohibitions.

III.   State Level Disaster Financial Assistance and Resources.

The SBA has been referring marijuana companies back to the Washington State Department of Revenue in order to locate and avail themselves of financial disaster relief opportunities (hemp companies are also eligible for state- and local-level relief). Washington State has published an official website addressing COVID-19 in the state, which includes a page titled “COVID-19 resource list for impacted Washington businesses and workers” and lists four categories of assistance: Financial, Export, Employer and worker, and Insurance. The “Financial Assistance” available to Washington state businesses includes:

Source: (3/26/20)

The first bullet point relates to the disaster loans issued by the federal SBA; marijuana companies are not eligible for these loans.

The second bullet point refers companies to the DOR, which offers the following guidance (as of publication):

In addition to granting extensions for monthly, quarterly, and annual returns (and encouraging businesses to file even if they cannot cover the payment), the Washington State Department of Revenue is also delaying scheduling of audits, waiving interest through April 17, 2020 (as of publication), and waiving delinquency fees for late renewals. (Note: the DOR is clear that penalties and interest accrued prior to February 29, 2020 will not be waived.)

The third bullet point indicates that the state is working to compile a list of local “bankers, financial associations, telecoms, utilities and major employers that may be able to provide relief, such as a) Deferred bills, waived fees, discounts, no-interest loans and other support; b) Debt and late-penalty forgiveness for companies and workers in order to help keep people employed; c) Favorable credit terms for firms that encounter cash flow problems.” As of publication, no such resources have yet been made available through the state.

IV.   Local Level Disaster Financial Assistance and Resources.

In the interim, local governments are stepping up to fill in the gaps and help companies stay afloat during the coronavirus pandemic. In Seattle, for example, Mayor Jenny Durkan has helped usher in the following programs and services for small businesses:

    • Evictions of small businesses for non-payment of rent have been temporarily halted in Seattle, effective immediately, and lasting until May 17, 2020 “or until Seattle’s coronavirus emergency ends”;
    • Vulcan, Inc has provided $100,000 by donation to assist restaurants and other small businesses in Seattle’s Chinatown International District (stretching from 4th Avenue to Rainier Ave. S and Yesler Way to S Charles Street);
    • To “allow small business owners increased flexibility during a period of financial duress caused by the COVID-19 outbreak,” business and occupation tax collections are deferred;
    • ~ $2.5 million is available for the City of Seattle Small Business Stabilization Fund, an emergency fund that provides working capital grants in amounts up to $10,000 to qualifying small businesses. The preliminary round of grants (for which applications were due yesterday; see also, below, “Economic Impact Survey for the Greater Seattle Region,” which may lead to additional emergency relief programs and support) authorized in amounts up to $10,000, required businesses meet the following criteria:
      • The business owner must have a low- or moderate-income (that is, ≤80% of the Area Median Income);
      • The business must have five employees or less;
      • The business must have a physical establishment;
      • The business must have experienced a loss of incomedue to COVID-19; and
      • The business must be located within Seattle.
    • King County Office of Equity and Social Justice (OESJ) is able to provide grants of up to $25,000 to community-based organizations and other stakeholders serving impacted communities (prioritized based on those working with communities at the highest risk of immediate and long-term negative health, social, and economic impacts, with an emphasis on communities located near isolation, quarantine, and recovery sites); and
    • Previous recipients of grants issued by the Social Justice Fund may apply for an additional $3,000 which may be used to support a variety of strategies to meet community needs and support mutual aid (priority for Black, Indigenous and People of Color).

The Greater Seattle region also continues to seek the public’s input with respect to coordinating a regional effort to assess the economic impacts related to COVID-19, particularly with respect to small to medium sized businesses. The Seattle Office of Economic Development, Greater Seattle Partners, and the Seattle Metropolitan Chamber of Commerce are seeking participants to fill out the “Economic Impact Survey for the Greater Seattle Region” available on the City of Seattle’s website. The information gathered and insights garnered will inform strategies to speed recovery and may lead to additional emergency relief programs and support.


In light of the Washington state Stay-At-Home Order, the team at Heidi Urness Law, PLLC has now limited in-person consultations and meetings, but continues to work with the same diligence and integrity for which we are known during this time of crisis to ensure you, your business, and your employees remain secure during these uncertain times.