ACT Resources – Cannabis Entrepreneurs– May 2020 Update
As the nationwide COVID-19 lockdowns continue in most states – although a few have announced limited reopenings to mixed reactions – the cannabis industry has forged on the best it can. While it seems these days that everything revolves around the novel coronavirus, and for good reason, it’s important not to lose sight of the bigger picture. The cannabis industry has already faced down the immense challenge of federal prohibition and continues to gain ground month after month. In addition to a COVID-19 update, this month’s news update will include the launch of a new social equity grant program in California and a big development for cannabis on one of the world’s largest sports stages.
COVID-19 UPDATE: The Emergency Cannabis Small Business Health and Safety Act
First things first: the COVID-19 pandemic has continued in full force, leaving the economy partially shuttered and many consumers quarantined at home or social distancing in public. While the federal government responded by authorizing trillions in emergency relief funding, the cannabis industry has been locked out of financial support due to its status as an illegal Schedule I substance under the federal Controlled Substances Act. A bill introduced in the House of Representatives could change that, however.
The Emergency Cannabis Small Business Health and Safety Act was introduced by Reps. Earl Blumenauer (D-OR) and Ed Perlmutter (D-CO) on April 23. If adopted, the bill would allow state-compliant cannabis businesses to access the stimulus funds already made available by Congress to other businesses. This includes relief measures like the Paycheck Protection Program, which provides forgivable SBA loans to businesses that use the funding primarily for salaries and wages, as well as the Economic Injury Disaster Loan (EIDL), which includes a $1,000 per employee grant as an advance. The bill also states that accepting federal funds would not subject a state-compliant cannabis business to “any federal law or regulation.”
The measure would avail cannabis businesses across the country to the trillions of dollars in emergency funding authorized by Congress, granting a new lifeline to cannabis entrepreneurs, many of whom have had to temporarily suspend operations. However, its chances of passage remain to be seen. At the time of this writing, the Emergency Cannabis Small Business Health and Safety Act had not yet been referred to a House committee, nor did it have an analog bill in the U.S. Senate.
Some Tax Deadlines Extended Until July 15th
As a result of the COVID-19 pandemic, the federal government extended all tax deadlines for returns that were due on or after April 1. Those tax deadlines have been pushed back to July 15, giving taxpayers more time to get their paperwork in order and filed, as well as to make their payments. This includes quarterly estimated payments.
While the extended deadlines have given many taxpayers, businesses and individuals alike, some breathing room when it comes to federal deadlines, not every state has followed suit. Be sure to check your state obligations as well to determine whether your taxes are due as regularly scheduled. In the event your state’s deadlines have already passed, you should immediately file the appropriate paperwork and remit an estimated tax payment to avoid mounting penalties.
California Announces $30M Cannabis Industry Social Equity Grant Program
On April 21, the California Governor’s Office of Business and Economic Development (GO-Biz) announced the creation of a new $30 million grant program targeting social equity in the cannabis industry. The program is primarily geared toward including and supporting individuals in the state’s legal industry who are from communities disproportionately impacted by prohibition.
The grant program will be funded through the Cannabis Equity Grants Program for Local Jurisdictions. About $23 million of the funding will be delivered directly to applicants in the form of grants and low or no-interest loans. The remaining $7 million would be used to provide support in the form of technical assistance, waived licensing fees, and assistance in recruiting and retaining a diverse and skilled workforce. The funding would be allocated as follows:
– City of Oakland: $6,576,705.76
– City of Los Angeles: $6,042,014.23
– City and County of San Francisco: $4,995,000.00
– City of Sacramento: $3,831,955.93
– City of Long Beach: $2,700,000.00
– County of Humboldt: $2,459,581.02
– County of Mendocino: $2,245,704.40
NFL Players’ Union and League Agree to End Cannabis-Related Suspensions
The NFL and the League’s Player’s Association signed a collective bargaining agreement in March that would end cannabis-related suspensions for athletes. The agreement tentatively ends a longtime ban on cannabis that saw players like running back Ricky Williams suspended at the height of their careers. The agreement specifically states that athletes caught violating cannabis possession laws would also not be suspended from play.
The end of suspensions was accompanied by a change in drug testing policy as well. The NFL raised the limit from 35 nanograms of THC to 150 nanograms, giving players a wider margin of error when taking a drug test. The League would also refrain from drug testing athletes after the first two weeks of training camp prior to the start of the regular season.
The NFL is the most popular professional sports leagues in the U.S. It has also previously taken one of the hardest line stances against cannabis possession and usage. The collective bargaining agreement leaves room for players to be expelled from the League for repeated violations of cannabis policy, however it greatly dials back past policies. When America’s favorite professional sports organization begins changing its tune towards cannabis, it could be seen as a reflection of the significant social progress cannabis has made in becoming an accepted mainstream good in the larger fabric of the country’s economy. Time will tell if other organizations follow suit.
Sticking Together Through Trying Times
Times are difficult for everyone right now, whether you are a cannabis entrepreneur or not. At times like this, it is important we all stick together. While ACT Resources is always happy to serve as your financial advisor in good times and bad, we also want to serve as a source of support for you, your business, and your family in these times. As the extended tax deadlines approach, it’s important to ensure your documentation is in order and your payments are remitted in a timely manner. However, we believe it is equally important to care for your own health and well-being right now, and we are proud to be your partner on the long road to recovery in a post-COVID-19 world. The cannabis industry is strong and resilient; we have faced down prohibition and continue to fight for social acceptance, and we can beat the novel coronavirus as well. If you need support for your business or otherwise, do not wait – ACT today.
