America’s state legal cannabis industry has been dubbed one of the fastest-growing industries in the country, but its federal classification has been a constant hindrance. While more than 30 states allow either medical or recreational cannabis, the federal government still classifies marijuana as a Schedule I controlled substance. Consequently, banks and financial institutions do not transact with businesses in the cannabis space, and, in many cases, they won’t even work with businesses that are indirectly connected to cannabis.
In the wake of the coronavirus pandemic and the resultant financial crisis, a group of senators has urged the federal government to grant cannabis firms access to financial aid. In a letter sent to the Appropriations Committee leaders, 10 senators have asked that language allowing cannabis firms to access financial aid via the federal Small Business Administration (SBA) be added to a soon-to-be unveiled spending bill document. This would see businesses in the cannabis space finally access SBA loans as well as disaster assistance as the country and world at large recovers from the worst financial downturn in a century.
Federal relief would help alleviate the impacts of the coronavirus pandemic, the senators wrote. Led by Sen. Jacky Rosen, the group was comprised of Senators Bernie Sanders, Cory Booker, Jeff Merkley, Maria Cantwell, Ed Markey, Ron Wyden, Bob Menendez, Alex Padilla and Raphael Warnock. The group sent the letter to the heads of the Appropriations Financial Services and General Government (“FSGG”) and the Senate Appropriations Committee asking that the federal aid language to be appended within the FSGG spending bill document for the fiscal year 2022.
The letter also requested that state legal cannabis businesses be allowed access to the Loan Guarantee, Microloan, Disaster Assistance and the 504/Certified Development Company Loan Programs. The SBA currently excludes businesses that are directly or indirectly involved with the cultivation, production and sale of cannabis products, the letter says, and this places undue and unfair pressures on small enterprises operating in states with legal cannabis markets.
Additionally, the letter mentions that banks do not transact with cannabis businesses because they fear repercussions from the federal government. As such, these cannabis operations mostly operate on a cash-only basis, which puts them at a high risk of robberies and burglaries. Additionally, the coronavirus can survive for quite a while on paper money, putting workers in the cannabis space as well as their clientele at risk of infection.
It would be good for the entire marijuana industry, including sector players such as Chalice Brands Inc. (CSE: CHAL) (OTCQB: CHALF), if companies in the industry were given the same access to federal business loans as do companies in other industries. Such a gesture would mean that the state-legal marijuana industry was being accorded equal treatment with other industries.
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