Earlier this week, MassRoots obtained a loan under the Paycheck Protection Program (“PPP”), which has been critical to ensuring our employees are paid their regular salaries so they, in turn, have the money they need to support their families, cover medical bills, and pay rent. We believe that all cannabis-related businesses, both plant-touching and ancillary, should be able to obtain PPP loans in order to support the hundreds of thousands of employees that comprise the regulated cannabis industry.
Paycheck Protection Program Equality
We’re asking our supporters, both individuals and businesses, to take the following steps to raise awareness and help cannabis businesses obtain equal access to PPP funding:
- Tweet the reasons you support #PPPEquality to @realDonaldTrump, @PressSec and your Senators and Congressmen.
- Email the White House and President Trump’s campaign in support of #PPPEquality at [email protected] and [email protected].
- Call the White House at 202-456-1111 and your Senators and Congressmen in support of equal access to PPP funding.
- If you’re employed in the cannabis industry, please record a video testimonial on how PPP funding would impact your life. You can submit it here or Tweet it, tagging @realDonaldTrump, your Senators and Representatives, and using #PPPEquality.
- Post on Instagram, tagging the White House and your representatives, using #PPPEquality on the reasons why you support cannabis businesses having equal access to PPP loans.
Why is structural reform necessary?
When the U.S. federal government signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law on March 27, 2020, one of the measures included in the bill was the Paycheck Protection Program. The PPP is designed to help small businesses and their employees survive during the stay-at-home orders and trying times of the pandemic, which is affecting businesses from all markets.
The PPP website describes the initiative as:
“An SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis,” and “a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.”
While cannabis remains illegal at the federal level, under the Controlled Substances Act, and the new law denies money from the CARES Act to businesses that are federally illegal, these businesses are not operating illegally at the state level. They are tightly regulated by the individual states.
Law-abiding, regulated cannabis businesses, whether plant touching or ancillary, and their employees should be granted the same access to government assistance as any other legally-operating business.
Now is the time to tell the U.S. government that you think the Paycheck Protection Program should be expanded to include cannabis businesses. Stand up for #PPPEquality with us and all of the other small businesses that make-up the regulated cannabis industry in the United States.
The U.S. Small Business Administration issued guidance earlier this month clarifying that marijuana businesses — and even some firms that don’t touch the plant but serve those in the cannabis industry — cannot receive aid in the form of federally backed loans.
“Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity,” the new memo says. “Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.”
The new document details the type of marijuana-related businesses that it says are “ineligible” to participate in the agency’s loan programs:
(a) “Direct Marijuana Business” — a business that grows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity. This applies to personal use and medical use even if the business is legal under local or state law where the applicant business is or will be located.
(b) “Indirect Marijuana Business” — a business that derived any of its gross revenue for the previous year (or, if a start-up, projects to derive any of its gross revenue for the next year) from sales to Direct Marijuana Businesses of products or services that could reasonably be determined to support the use, growth, enhancement or other development of marijuana. Examples include businesses that provide testing services, or sell grow lights or hydroponic equipment, to one or more Direct Marijuana Businesses. In addition, businesses that sell smoking devices, pipes, bongs, inhalants, or other products that may be used in connection with marijuana are ineligible if the products are primarily intended or designed for such use or if the business markets the products for such use.
(c) Hemp-Related Business” — a business that grows, produces, processes, distributes or sells products purportedly made from “hemp” is ineligible unless the business can demonstrate that its business activities and products are legal under federal and state law. Examples of legal hemp products include paper, clothing and rope.
The new memo, issued by SBA Administrator Linda E. McMahon, is intended to provide clarification on a longer document laying out rules for loan programs that SBA issued earlier this year.
The policy document also specifies that SBA borrowers can’t rent office space to marijuana-related businesses.
“For consistency with the changes identified above regarding marijuana-related businesses, Lenders are advised that, during the life of the SBA-guaranteed loan, a borrower may not lease space to the ineligible businesses described above because the collateral could be subject to seizure and because payments on the SBA loan would be derived from illegal activity,” McMahon wrote. “If a borrower does lease to an ineligible marijuana-related business, SBA District Counsel should be consulted to determine what action should be taken.”