Making Sense of the Fed’s COVID-19 Bailout Bills
In a word; historic. That is perhaps the best way to describe recent efforts by federal lawmakers to offset the economic catastrophe currently being created by the COVID-19 virus. In the last 2 weeks alone, multiple bills have been passed totaling more than $2.5 trillion in funding for everything from stimulus checks for taxpayers and loan programs for small business to corporate bailouts, agricultural grants, payroll assistance, and financial support for states, cities, and towns. But what does this all mean for folks who make a living in hemp? After all, legal clarity and stability were already challenges for the industry long before the coronavirus came to town.
“Call it a benefit of being on the legal side of the cannabis business.” explained Kristen Nichols, Editor of The Hemp Industry Daily, “Legal hemp businesses are eligible right now for emergency loan assistance and other lifelines.” Nichols hosted a webinar on April 9th with other industry experts to discuss the various ways in which hemp businesses, workers, and farmers might stand to benefit from the bailout efforts. She was joined by Jonathan Miller, the General Counsel for the U.S. Hemp Roundtable, and Phil McCready, co-founder of the Colorado Hemp Industries Collaborative. Their message was clear; help is on the way but you are going to have to ask for it.
- Loans and payroll grants are available to all hemp businesses that are in compliance with both state and federal regulations.
- These loans can be secured through the local office of your Small Business Administration or through your local bank, assuming that the latter is authorized to dispense federal loans.
- Cannabis businesses and growers are not currently eligible for federal assistance. This includes CBD products that are derived from marijuana.
- Companies and operators who work in both the legal cannabis and legal hemp space are encouraged to apply for loans/grants but are urged to focus only on the hemp side of their business when applying. “The more documentation that you can provide that shows how the loan or grant will support your hemp LLC the better for your application. ” explained Nichols, who has already helped more than a dozen operators navigate the process.
- Your business has to have been in operation for at least 1 year prior to the crisis to be eligible.
- Independent contractors and gig economy type employees are all eligible.
- Early numbers indicate that online CBD sales are up since the start of the pandemic in the United States.
- Don’t be afraid to have a lawyer help you. Chances are that the law is on your side. “Often, it isn’t the bank that says they cannot do business with a hemp company or farmer. They just think they can’t work with you and so the conversation never progresses. You may need a lawyer to help explain the new laws to them.” suggested Miller.
- How exactly the USDA plans to support farmers and other agricultural operators remains an area of confusion. “There are billions and billions of dollars made available [for farmers] by the legislation but we are still on hold in terms of knowing how that will be dispensed.” explained Miller.
- Farmers are urged to contact their local Rural Development Loan Agency to explore the potential for USDA support.
- Hemp fiber production and sales are not currently considered an “essential” business .
- All participants involved stressed the importance of keeping an eye on both the dangers right now as well as the opportunities. Things like improved domestic manufacturing and industry-friendly banking legislation could all improve as the result of coronavirus fallout. “This is a time to focus on having a good plan and good partners.” summed up McCready, “It is in our relationships with others that we will find our opportunities.”