Member Article

The COVID-19 pandemic has touched all aspects of both the hemp and marijuana industries and their supply chains, as many other industries have experienced. To provide significant relief for the entire economy, the U.S. federal government passed The Families First Coronavirus Response Act and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), collectively, the largest aid package ever passed. Because marijuana remains federally illegal under the Controlled Substance Act, however, the marijuana industry will not receive any of this assistance promised under the CARES Act.

On the other side of the cannabis industry coin, the hemp industry will have ample opportunities to receive stimulus money from the CARES Act. Stimulus money available under the CARES Act for distribution by various government agencies to businesses, including hemp industry participants, includes:

• $600 billion from the Main Street Lending Program
• $350 billion from the Small Business Administration
• $14 billion from U.S. Department of Agriculture, Commodity Credit Corporation
• $9.5 billion from the U.S. Department of Agriculture, COVID-19 Relief
• $20.5 million in Rural Business Development Grants
  
  

Beyond the typical Small Business Administration (SBA) and U.S. Department of Agriculture (USDA) relief available, the amounts above reflect that the CARES Act provides for a Paycheck Protection Program (PPP) and an Emergency Injury Disaster Loan (EIDL) advance. The EIDL advance provides up to $10,000 of immediate economic relief grants to businesses that are currently experiencing temporary difficulties. For a more detailed discussion of the PPP, please see our prior blog posts, “SBA favorable interpretation of CARES Act allows small business employers participating in the PPP Loan Program to include withholdings and employee share of OASDI taxes,” “SBA issues further guidance concerning the Paycheck Protection Program,” and “How to apply for a SBA Paycheck Protection Program loan.” On April 9, the Federal Reserveannouncedthe availability of $600 billion in loans in addition to the PPP through the Main Street Lending Program, which businesses in the hemp industry can apply for 4-year loans by meeting certain specified criteria (e.g., the business was in good financial standing prior to the crisis, and employs up to 10,000 workers or has revenues of less than $2.5 billion) and making certain attestations related to its business operations and needs and compliance with applicable laws. Needless to say, there are ample opportunities for businesses in the hemp industry to secure financing to support them through this economic crisis.

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