Cannabis Industry Update

A marijuana leaf in the vegetative room at Alaska Cannabis Cultivators Monday morning, June 5, 2017. On-site consumption was approved at the Fairbanks City Council meeting in a 4-2 vote Monday, April 22, 2019.

Congress and President Donald Trump late last month approved $50 billion in aid for small businesses across the country that are struggling due to closures related to the COVID-19 outbreak. But cannabis-related businesses — a burgeoning sector of Alaska’s small businesses — have been left out of these supportive loans.

Roughly $600 million in low-interest loans have been approved to be paid to 2,703 small businesses across Alaska, according to the Small Business Administration. The same federal agency, however, says cannabis cultivators, processors and retailers don’t qualify for aid. That exclusion also applies to the Paycheck Protection Plan, also part of the new federal CARES Act aid package. 

Cannabis remains a federally controlled substance and thus does not qualify for federal aid, the SBA says.

Monthly revenue from Alaska’s marijuana tax set another record of $2 million in October of last year, according to the Department of Revenue, but that doesn’t mean Alaska’s cannabis businesses are floating on piles of cash.

Alaska Marijuana Industry Association President Lacey Wilcox feels like Alaska’s cannabis businesses are forced to remain open amid COVID-19 uncertainty since they don’t have the financial option of closing.

“Other businesses that maybe need to close because they’re not considered essential or they choose to close or they can’t comply with social distancing, they are able to make those decisions,” Wilcox said this week. “In the marijuana industry, we feel we’re not able to make that judgment call without putting at risk the economic viability of the businesses.

“If a small marijuana business did need to close right now, perhaps they would be closing forever,” she said.

Cannabis businesses, like other state businesses, are allowed to stay open during large-scale shutdowns as long as they abide by the state social distancing mandate that requires that the business be able to maintain 6 feet of distance between individuals and a limit of 10 individuals per room is maintained.

Wilcox, along with other industry advocates, are working to request that the state provide supplemental relief funding for these businesses that were left out of some of the assistance other businesses are receiving. A formal request has not been submitted yet, Wilcox notes, adding that the group is waiting to connect with the state Department of Commerce on the issue. 

Gov. Mike Dunleavy told reporters Thursday evening he would need to look into the issue and did not communicate whether he would support state aid to the cannabis sector.

Only a couple retailers across the state have chosen to close during the COVID-19 shutdown, Wilcox said, adding that she didn’t know the reasoning. 

“Most businesses are trying to maintain operations to stay afloat,” she said.

On a more national scale, the beginning steps are being taken to draft a fourth round of relief funding from the federal government, and Wilcox, along with her colleagues from other states that have legalized recreational cannabis, are lobbying Congress to include relief dollars for growers and retailers.

One ally the state’s cannabis industry has found is in Alaska Republican Rep. Don Young, who has stated before he doesn’t personally support cannabis use but adamantly supports state’s rights on the matter.

Young and a group of other House members from states that have legalized cannabis have drafted a letter to House Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy asking for small business relief funding to extend to cannabis businesses in states where cannabis is legal.

The letter refers to the exclusion of cannabis businesses as one of the “shortcomings” in the CARES Act. 

“State-legal cannabis businesses need access to CARES Act programs to ensure they have the financial capacity to undertake the public health and worker-focused measures experts are urging businesses to take,” the letter reads. 

“This lack of access will undoubtedly lead to unnecessary layoffs, reduced hours, pay cuts, and furloughs for the workers of cannabis businesses who need support the most. The COVID-19 outbreak is no time to permit federal policy to stand in the way of the reality that millions of Americans in states across the country face daily — that state-legal cannabis businesses are sources of economic growth and financial stability for thousands of workers and families, and need our support.”

Other signers on the letter include Democratic Reps. Barbara Lee of California and Earl Blumenauer of Oregon and Republican Rep. Tom McClintock of California.

Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMpolitics.