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Good News, Bad News: Maryland Cannabis Businesses are Essential! But Do Not Qualify for SBA Loan Program

March 25, 2020

As you may have seen, the Governor issued an order on Monday ordering all non-essential businesses and other establishments to close.  The Maryland Office of Legal Counsel issued Interpretive Guidance issued guidance, as well, making it clear that the Order is not a shelter-in-place order, but noted that all Marylanders are urged to remain home and even businesses that are permitted to remain open are urged to promote work-from-home arrangements to the greatest extent possible.

 

Governor Hogan’s Order noted that the list of essential businesses is the same list that the federal government released as “federal critical infrastructure sectors.” There has been some confusion regarding the types of businesses that meet the criteria of federal critical infrastructure. The Interpretive Guidance from the Maryland Office of Legal Counsel provides more detailed guidance on this topic and included a non-exhaustive list of businesses that are considered within the “federal critical infrastructure” sectors. 

 

The good news for cannabis related businesses is that medical cannabis growers, processors and dispensaries are explicitly listed as essential businesses under The Healthcare and Public Health sector.  Accordingly, licensed cannabis growers, processors and dispensaries may remain open. Of course, under the Order, employers are still urged to promote work from home arrangements. 

 

The bad news is, because cannabis remains a Schedule 1 drug and remains illegal under federal law, the new federal SBA loan program for small businesses is not available to cannabis related businesses at this time.   That said, Maryland released some new state funding programs today that may be available to cannabis business.   Here is a list of the newly adopted Maryland programs for small businesses….

 

Emergency Relief Loan Fund – This $75 million loan fund offers no interest or principal payments due for the first 12 months, then converts to a 36-month term loan of principal and interest payments, with an interest rate at 2% per annum. 

 

Emergency Relief Grant Fund – This $50 million grant program offers grant amounts up to $10,000, not to exceed 3 months of demonstrated cash operating expenses for the first quarter of 2020. 

 

Covid 19 Layoff Aversion Fund – The Maryland Department of Labor established this fund with $7 million of State and federal Rapid Response resources.