On April 23rd, 2020 a bill was introduced in the House of Representatives to include the cannabis industry in the next small business relief package. While this is great news overall, without certain conditions added, this effort will greatly leave out the cannabis industries most vulnerable population, the social equity operators.
Contact your representative today & request Congress to:
1) Direct the SBA and banks to accept applications from businesses owned by individuals with convictions because a conviction is a qualifying factor for equity operators in states with social equity programs.
2) Direct the SBA to switch the qualifying metric from payroll to gross receipts because most social equity operators are owner-employee run and don't have a payroll to qualify.
3) Connect the SBA and banks compensation for managing the process dependent upon their performance in achieving the program’s diversity goals.
Additional Background:
Shelter in place orders across the United States have been implemented to combat the potential devastation of COVID 19 and as a result many small businesses are currently not operating. During the time these small businesses are non-operable their debts continue to accrue making post- COVID sustainability unlikely. As a result, Congress is proposing to establish a social program that would provide relief to small businesses impacted by COVID 19 (i.e. CARES ACT). The cannabis industry, like all industries face the above mentioned challenges, however, the cannabis industry is excluded from the benefits of the CARES ACT. This is after the majority of legal cannabis states have recognized the essential nature of legal cannabis.
The crisis has disproportionately impacted entrepreneurs of color both operating and awaiting the award of social equity licenses. Pre-existing delays in application processing are forcing social equity applicants to maintain commercial leases and mortgages, as required by the states, without access to traditional loans or opportunity to recover their investments. The suspension and slowing of application processing from cannabis businesses due to COVID 19 is delaying the entry of social equity operators into an industry that already has white ownership at roughly 95%.
Without relief, social equity applicants cannot compete with general applicants in the cannabis industry receiving relief, let alone multi-state operators with access to investors, economies of scale, and additional time to gain market share.
