Lawmakers Propose Disaster Relief to Cannabis Industry with New Bill

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Wildfires have broken records across California, Oregon, and Washington this year as millions of acres have been destroyed, forcing hundreds to evacuate.

On September 24, Congressional Democrats out of Oregon proposed a bill that may bring crucial relief to many cannabis operations across the country in the wake of not only the COVID-19 pandemic but the recent destructive wildfires that have burned large portions of the American West.

Sponsored by Senators Ron Wyden and Jeff Merkley, as well as Representatives Peter DeFazio and Earl Blumenauer, the Small Business Disaster Relief Equity Act looks to grant federal disaster assistance to companies in the legal cannabis industry.

Since cannabis currently remains federally illegal, many cannabis businesses are excluded from several traditional means of federal financial relief – including Small Business Administration (“SBA”) programs and cannot avail themselves of bankruptcy protections.

If passed, the Small Business Disaster Relief Equity Act would ensure that federal services, loans, and tax benefits are not denied to legitimate cannabis companies based solely legality of marijuana at the federal level.

In a press release to announce the introduction of the bill, Sen. Wyden stated:

Cannabis businesses in Oregon hurt by the blazing wildfires or any other disaster shouldn’t be shut out from federal relief simply because the federal government is stuck in yesteryear…These legal small businesses employ thousands of workers and support our struggling economy. If they need federal support, they should get it. Full stop.”

According to local news outlets, the Oregon Liquor Control Commission (“OLCC”) has issued a survey to establish the overall damage as a result of the recent fires. As of late September, the OLCC survey found that seven Oregon cannabis licensees reported a “confirmed total loss.”1

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Cannabis does not currently qualify for federal crop insurance, and while some private insurance exists, it is notoriously difficult to obtain for cannabis cultivators.

In California, cannabis cultivators face a similar dilemma. The San Francisco Chronicle interviewed several business owners on being unable to financially protect their crops. Summarizing her experience, Aster Farms CEO Julia Jacobson stated:

Outdoor and greenhouse cannabis does not qualify for crop insurance. When your crop burns, it’s a complete financial loss. For an industry that has been deemed essential, being denied disaster insurance for the crop you spent a year growing is a hard pill to swallow.”2

There have been several bills proposed aimed at assisting legal cannabis businesses in the wake of the pandemic, one of the most promising being the Secure And Fair Enforcement Banking Act (“SAFE Banking Act”). That said, the bill has been stalled in the Senate since last fall.

With the SAFE Banking Act on standby, the ongoing destruction from wildfires, and a national coin shortage complicating the predominately cash-only industry,3 the Small Business Disaster Relief Equity Act could be a lifeline for many struggling business owners.

For more on the Small Business Disaster Relief Equity Act, click here to read the press release from the bill’s co-sponsors.

  1. Rogoway, Mike. “Oregon Wildfires Destroyed at Least Seven Marijuana Businesses,” September 23, 2020. https://www.oregonlive.com/business/2020/09/oregon-wildfires-destroyed-at-least-seven-marijuana-businesses-confirmed-total-loss.html
  2. Earlenbaugh, Emily. “Many of California’s Cannabis Growers Uninsured, in the Line of Fire.” San Francisco Chronicle. Hearst Communications, Inc., September 15, 2020. https://www.sfchronicle.com/bayarea/article/Many-of-California-s-cannabis-growers-are-15569406.php
  3. Barbagallo, Paul. “Coin Shortage Lays Bare Cannabis Industry’s Payments Problem.” Cannabis Dispensary. GIE Media, Inc., September 17, 2020. https://www.cannabisdispensarymag.com/article/coin-shortage-cash-cashless-dispensary-payments/

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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