Marijuana dispensaries deemed 'essential' but ineligible for federal stimulus

Sunday, April 12, 2020

As grocery stores and pharmacies struggled to keep toilet paper and hand sanitizer on the shelves in the early days of the coronavirus outbreak, many cannabis dispensaries saw inventories sharply decline as customers feared those businesses would be deemed nonessential.

But when states and local governments began issuing stay-at-home directives, most communities that allow the sale of medical marijuana chose to include dispensaries alongside supermarkets and drugstores on lists of businesses allowed to remain open.

But because marijuana sales are still illegal under federal law, businesses operating under state statutes are barred from receiving federal assistance, including aid for small businesses in the massive $2 trillion economic recovery package signed into law last week.

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The CARES Act includes $350 billion for the Small Business Administration to provide forgivable loans to companies with 500 or fewer employees, and the Trump administration is now asking Congress for an additional $250 billion.

The paradox of being deemed essential by one level of government but disqualified from receiving aid from another is vexing to many dispensary owners.

"How can cannabis be deemed essential right now, during this crisis, and yet not be offered the same opportunities as other businesses with stimulus packages or SBA loans?" asked Yvonne DeLaRosa Green, who co-owns 99 High Tide Collective, the only cannabis dispensary in Malibu, California. She said she doubled staffing to meet the current demand for delivery, pickup and online orders.

"We're on the front lines," she added. "Our cannabis consultants are risking their lives, literally, to stay open to provide medicine for people."

View this post on Instagram COVD19 UPDATE: 99 HIGH TIDE IS OPEN FOR PREORDERED PICKUP AND DELIVERY ONLY. We are so blessed to be open and serving natural medicine in this time! Temporary shop hours are 11am - 7pm. Please preorder on our website Click the drop-down Menu at the top right and then SHOP. No Minimum for Pick Up! Go to check out and select Pick Up. No delivery fee. $199 delivery minimum. You can also call us at 310-456-9930. If this line is busy please call, 254-702-3033. Thank you for understanding these changes as we stay safe and slow the spread of the corona virus. Blessings to all

A post shared by 99 High Tide Malibu (@99hightide) on Mar 19, 2020 at 12:27pm PDT

For now, DeLaRosa Green said she doesn't need the loans, but this isn't the first time her business was passed over for federal aid.

In 2018, her home was destroyed by the Woolsey fire and her dispensary was forced to close for two weeks. But unlike other businesses in her community, hers was unable to seek federal disaster relief funds.

Because the federal government still considers marijuana a Schedule I controlled substance, banks can be prosecuted for doing business with cannabis companies, which makes access to capital much more difficult.

After the wildfires, DeLaRosa Green said her business survived because she took out private loans with high-interest rates.

In addition to dispensaries, operations that grow marijuana, conduct lab tests or sell related paraphernalia also have been ruled ineligible.

Josh Kappel, a founding partner of Vicente Sederberg, a national cannabis law firm, said he believes coronavirus has changed all businesses in America, including cannabis.

Being widely considered essential, he said, is "a very substantial and significant step forward for the industry."

Perhaps, he added, that could lead to lasting changes within and adjacent to the industry.

"One way that the federal government could provide aid in the cannabis industry would be to pass the SAFE Banking Act and really open up banking and lending to this industry," Kappel told ABC News.

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The SAFE Banking Act would allow banks to do business with legitimate marijuana-related businesses. The legislation passed in the House and has been introduced in the Senate.

Back in California, a state that benefits from cannabis tourism, DeLaRosa said she and her customers would be celebrating 4/20 a bit differently this year. Her store is hosting a virtual smoke-in with music, comedy and DIY classes to promote social distancing and wellness: "We are promoting stay-at-home, we are promoting de-stressing, we are promoting internal joy, and we're promoting healthy good vibes."

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