Cannabis stocks are soaring due to a sudden surge in marijuana sales amid the coronavirus pandemic. The Horizons Marijuana Life Sciences ETF closed with a gain of 6.2% on Wednesday. The ETF tracks the North American marijuana industry. However, don’t get too excited about that! There are still struggles for the marijuana sector. Marijuana isn’t legal at the federal level. As a result, the sector won’t get any business relief or help during emergencies. Recently, I discussed how the cannabis industry pleaded with the federal government to help cannabis businesses during this distressing time. Federal business relief doesn’t look likely for the sector.
Cannabis Sector Won’t Get Business Relief Amid COVID-19
Businesses have shut down due to the coronavirus outbreak, which caused losses for many small businesses. Usually, smaller companies can’t sustain themselves during an emergency or a financial crisis. The federal SBA (Small Business Administration) provides emergency business relief until the situation gets better. Since cannabis isn’t a legal drug, the sector is prohibited from receiving any federal protection or benefits.
A Marijuana Moment article discussed that the SBA reiterated that the cannabis industry won’t get any business relief during the COVID-19 outbreak. The SBA specified this to a cannabis business owner who inquired about eligibility for assistance. In a Twitter post, the SBA said, “With the exception of businesses that produce or sell hemp and hemp-derived products [that were federally legalized under the 2018 Farm Bill], marijuana-related companies are not eligible for SBA-funded services.” Earlier, the SBA confirmed the same to Cannabis Business Times. The SBA said that cannabis businesses in the US can’t expect any financial assistance from the federal government.
Marijuana Industry Struggles In The US
The marijuana industry is getting more prominent in the US. More states are legalizing cannabis. As a result, marijuana is also an essential item in the US. To learn more, read COVID-19 Pandemic Made Marijuana an Essential Item. Although these businesses provide tax revenues and employment opportunities, they suffer during crucial times. The US marijuana sector has already struggled to get financial help. The SAFE ACT should resolve the issue. However, like all other marijuana reforms, the bill still hangs in the Senate because of strong opposition from Republicans.
Four marijuana industry trade groups submitted a plea to Congress so that state-legal cannabis businesses can qualify for assistance. However, the business probably won’t get assistance soon. State governments will have to decide about providing financial aid to marijuana businesses.
Meanwhile, cannabis players are taking advantage of the rise in cannabis sales. Cannabis players like Aurora Cannabis (NYSE:ACB), Canopy Growth (NYSE:CGC)(TSE:WEED), Hexo (TSE:HEXO), and Aphria (NYSE:APHA) closed 4.0%, 7.7%, 9.9%, and 8.5% on Wednesday. Curaleaf reported impressive fourth-quarter results. However, the stock closed 10.5% lower yesterday.