“Essential” pot shops should get coronavirus stimulus funds

Aconfounding hypocrisy about cannabis is again rearing its head. In mid-march, the U.S. Small Business Administration (SBA) announced disaster assistance including low-interest loans of up to $2 million — yet taxpaying, state-licensed cannabis businesses do not qualify, according to the SBA. Congress went on to pass a $2 trillion stimulus package, the largest emergency relief bill in American history — but cannabis businesses are left out of that, too.

Licensed cannabis businesses across the U.S. are unable to take the ordinary tax deductions afforded to other industries, leaving them saddled with an effective tax rate that is two-to-three times higher than other legal businesses. In sum, legal cannabis businesses paid an estimated $4.7 billion in federal taxes in 2017, for example (along with state and local taxes).

And in recent weeks many states have declared cannabis businesses as “essential service” providers — and yet the government is not providing any emergency support so these businesses can meet payroll and continue operating.

Despite reports of strong sales at dispensaries as local officials issued shelter-in-place orders, the downstream impact of the virus is affecting a wide swath of the industry. These are certainly not boom times for cannabis; retailers are surviving because of the ability to continue serving patients and consumers in their community.

Meanwhile, the companies that cultivate plants, manufacture infused products and provide other necessities such as packaging, sales support, bookkeeping and other professional services have seen their own business severely curtailed amid this crisis. And this situation is getting worse, not better.

Helping these businesses bridge this crisis isn’t just in the best interests of the cannabis industry itself: It’s the right choice to keep an economic driver afloat as we navigate the global pandemic.

In 2019, global cannabis sales rose to $15 billion, and the lion’s share happened in the United States, according to data from Arcview Market Research. For comparison’s sake, the National Football League generates approximately $15 billion annually. There’s no denying these sales have resulted in billions of dollars in tax revenue for Colorado and beyond.

In its relatively short existence, the cannabis industry has also created upwards of 200,000 jobs — jobs that offer opportunities to workers of all education levels. Some of these jobs have already been lost due to the pandemic. Issues such as supply chain disruptions and drastic drops in travel and tourism could negatively impact numerous cannabis operators in coming months.

Should these businesses be forced to permanently close their doors, medical marijuana patients and other consumers will be forced to turn to the illicit market, erasing so many of the hard-won safety and regulatory gains of state legalization.

The ineligibility of cannabis businesses for disaster-assistance loans is especially unfair when you consider that dispensaries have been designated essential in more than a dozen states, not unlike pharmacies, gas stations, and grocery stores.

Cannabis operators already shoulder serious financial burdens just being in this industry: a lack of access to banks, loans, and financial services; the inability to deduct business expenses due to Section 280E of the federal tax code, meaning an effective tax rate as high as 70%, according to a recent Bloomberg report; not to mention onerous state and local licensing fees and taxes.

Meanwhile, cannabis businesses are of course required to comply with other coronavirusrelated measures, such as paid sick leave coverage. And now, after paying billions in federal taxes, they’re being left out of emergency funding.

Cannabis small businesses aren’t asking for special treatment. They only seek to be treated like all other job-generating, tax-paying companies in this country.

On behalf of the legal cannabis industry, I and the National Cannabis Industry Association is asking our nation’s lawmakers to stop discriminating against small cannabis businesses, their employees, and the customers and patients they continue to serve during this public health crisis.

Aaron Smith is co-founder and executive director of the National Cannabis Industry Association the largest trade association representing legal cannabis businesses in the U.S, working to advance the industry on a national level.