California cannabis, deemed essential in coronavirus crisis, is ‘on the brink of collapsing’

Cannabis companies may be deemed essential business in California during the coronavirus emergency, but when it comes to support, some in the industry say the state and federal governments have left the them high and dry.

The industry is “on the brink of collapsing,” said Jackie McGowan, a consultant who represents the cannabis companies.

McGowan said that large, multi-state cannabis operators like Harvest Health and Acreage have begun shuttering their California acquisitions in response to the current crisis.

“When we first were declared essential, I felt like we had a big win,” said Jerred Kiloh, a dispensary owner and president of the United Cannabis Business Association, a trade group representing more than 160 retailers.

But the industry has been barred from receiving the Small Business Administration loans Congress allocated to help employers navigate the economic harm caused by the pandemic. Cannabis remains illegal under federal law.

“Not being allowed access to the stimulus funds is not a real surprise given the ever present and existing conflict between state and federal law,” McGowan said. She’s turning her lobbying requests to other ideas, such as seeking business deductions that the IRS allows to other employers.

The United Cannabis Business Association has asked California state government to lower taxes, a suspend permitting fees or extend license renewal deadlines.

“We got a no,” Kiloh said.

As a result, cannabis companies are in “a weird place,” Kiloh said, essential, but not so much that the state is coming to their assistance.

“There is no program that is set aside for cannabis. That’s all we’re asking for,” Kiloh said.

He cautioned that there are 100,000 cannabis workers in California, and many of them could soon wind up joining California’s unemployment rolls.

“If 100,000 cannabis workers collect unemployment, that’s a huge burden on the state,” he said.

McGowan said that while cannabis businesses across the state are more optimistic about receiving tax relief at the state level than they are from the federal government, “that is regrettably the same as praying for a miracle.

“That is unfortunately where the industry is today. Hoping and praying for some sort of legislative reform that leads to economic relief immediately,” McGowan said.

This story was originally published April 20, 2020 at 11:23 AM with the headline "California cannabis, deemed essential in coronavirus crisis, is ‘on the brink of collapsing’."