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ACT Resources – Cannabis Industry Covid-19 – April 2020

This month’s news update comes as we remain in a global state of social distancing to slow the spread of COVID-19, better known as the coronavirus. In a difficult time like this, many businesses and individuals alike are struggling financially, so we’ll offer some information about tax deadline extensions and the massive relief package signed into law last week. In addition, the cannabis industry hasn’t stopped moving, so we’ll take a look at ongoing developments impacting cannabis businesses everywhere, from the SAFE Banking Act

ACT Resources Covid-19 Cannabis Industry
Work from home

ACT Resources is working remotely to serve your business while Cannabis Industry Covid-19 disruptions continue

To abide by social distancing best practices, ACT Resources is not open for physical walk-ins or consultations. However, we are dedicated to serving you through this challenging time and remain fully operational online. Don’t hesitate to call or email us with any questions as you navigate the fallout from the coronavirus pandemic.

Tax filings and payments extended 90 days

In response to the spread of COVID-19, the U.S. Internal Revenue Service (IRS) extended the deadline for tax filings and payments by 90 days, from April 15 to July 15.

While the extension offers many businesses additional time to prepare for their federal tax filings, state taxes might still apply. Not all states extended deadlines alongside the federal government, so check with your tax professional to be sure you don’t have any tax liabilities coming due.

All returns due on other dates – including the past March 15 deadline, upcoming May 15 deadline and end of year deadlines – were not extended and remain due as originally scheduled.

Cannabis taxes
Cannabis tax filing guide

The CARES Act coronavirus stimulus package and Paycheck Protection Program

A massive $2 trillion stimulus package intended to mitigate the economic impact of the COVID-19 pandemic was signed into law by President Donald Trump on March 27. The spending measure includes $350 billion in forgivable Small Business Administration (SBA) loans to small businesses, an expansion of unemployment insurance benefits, and direct payments of up to $1,200 to some individual taxpayers.

The Paycheck Protection Program, a component of the CARES Act that makes about $350 billion in partially forgivable SBA loans available to businesses, is aimed at lending businesses up to 250% of their monthly payroll expenses so they can retain their workforce.

However, despite employing roughly 240,000 people nationwide, cannabis businesses are excluded from the assistance prescribed by the CARES Act. The SBA announced on March 26 that state-licensed cannabis businesses are ineligible for assistance because cannabis remains a Schedule I controlled substance under federal law.

Direct individual payments under the CARES Act

As part of the CARES Act stimulus package, individuals making up to $75,000 per year would qualify for a one-time direct payment of $1,200. Households making up to $150,000 would be eligible for a one-time direct payment of $2,400. Individuals with children would also be eligible for an additional $500 payment per child. Above the income thresholds, the payments would begin to phase out, with individual earners making $99,000 per year and households making over $199,000 per year receiving no financial aid.

Other measures intended to assist individuals include a lifting of the 10% penalty for retirement distributions up to $100,000 withdrawal. In addition, retirement distributions could be included in income over three years. Finally, retirement minimum distributions are waived for the 2020 tax year, meaning retirees will not be required to draw from their plans.

Where is the SAFE Banking Act?

After significant progress last year, the SAFE Banking Act remains stalled in the Senate Banking Committee. Lawmakers and industry groups have repeatedly lobbied chairman Sen. Mike Crapo (R-ID) to take up the measure and approve it in committee. Thus far, however, it has languished. Last month, a group of 50 state banking associations expressed their support for the measure and asked Crapo to advance the legislation.

While the SAFE Banking Act took a back seat to the Senate’s rush to pass the $2 trillion stimulus package in March, it remains a central issue to cannabis businesses, especially as economic downturn looms. Access to financial institutions and products that other industries use regularly is even more important as the coronavirus pandemic slows economic activity worldwide.

Where do cannabis dispensaries remain operational?

In response to the COVID-19 pandemic, many states ordered certain businesses to close their doors. In some states, this included cannabis dispensaries, while in others they were considered essential services. Here’s a quick look at the states where cannabis dispensaries remain operational as of March 30:

Medical dispensaries only:

  • Arizona
  • Delaware
  • Connecticut
  • Louisiana
  • Maryland
  • Massachusetts
  • Minnesota
  • Montana
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • Ohio
  • Oklahoma
  • Rhode Island
  • Vermont
  • Washington D.C.

Adult use and medical dispensaries:

  • California
  • Colorado
  • Illinois
  • Michigan
  • Oregon
  • Washington

The closure of businesses across the country has impacted every industry and cannabis is no different. Even where cannabis dispensaries remain open, supply chain disruptions, quarantines, and a lack of tourism have led to significant challenges. The cancellation of trade shows and networking events has also disrupted lead generation for many businesses. And with cannabis businesses locked out of many conventional financial institutions and cut off from federal aid, the industry has unique challenges as well.

However, the cannabis industry is no stranger to challenges and obstacles. In a difficult time such as this one, it is important for an industry built on cooperation and resilience to stand strong and unified. In this moment, it is more important than ever to address the unfair barriers placed against the cannabis industry; it’s critical cannabis businesses stand together to support measures like the SAFE Banking Act and demand access to federal assistance and an end to prohibition era policies. ACT Resources aims to serve not just as your financial professional in this time, but as a partner in the continued growth and success of the legal cannabis industry. In times of difficulty, we can’t just sit back and watch, so ACT today.

Cannabis Industry Covid-19