The marijuana industry has seen more sales due to the coronavirus pandemic. US states that have made medical and recreational cannabis legal have seen a spike in sales. Many states have even declared that cannabis is an “essential item.” They’re allowing dispensaries to stay open. To learn more, read Marijuana Sales Soar amid Coronavirus Pandemic. However, since marijuana is still illegal under federal law, the industry is losing out on all of its federal benefits. Currently, the cannabis industry has pleaded with the federal government to help cannabis businesses during these distressing times.
Marijuana is still illegal at the federal level, which creates a lot of issues for cannabis businesses. Previously, I discussed how federal prohibition doesn’t allow banks and financial institutions to provide financial support to cannabis businesses. Since the coronavirus outbreak is causing chaos in the US, the cannabis industry is worried that it won’t receive any protection from the federal government. Even though cannabis is illegal, the industry contributes to job growth in the country. Thousands of workers are part of the state-legal cannabis industry. According to estimates by NORML, the legal cannabis industry now employs close to 240,000 full-time workers. As a result, the cannabis industry association has contacted the federal government to get some business relief.
A Marijuana Moment article discussed that since marijuana is illegal, it misses out on any benefits from the federal government including emergency relief funds especially during a crisis like now. Four marijuana industry trade groups sent a joint letter to Congress to ensure that state-legal cannabis businesses can qualify for assistance.
The Marijuana Moment article stated that the four cannabis groups that sent the letter are:
The letter to Congress said, “Our members follow strict regulations, create jobs, generate billions of dollars in tax revenue—including federal corporate tax revenue—and act as good corporate citizens.” The letter also said, “Yet it appears as if these businesses will not be eligible for the same loans available to other businesses in this country at risk due to the global pandemic.”
The group stated that despite not receiving any benefits, the business has to follow coronavirus-related measures like paid sick leave coverage for its employees. These businesses need to receive some aid from the federal government. Most of the US cannabis businesses are already in financial distress due to declining revenue growth. The global pandemic has resulted in high sales due to panic buying. We don’t know if the increased sales will be consistent. The higher sales did show the marijuana demand in the states.
In a separate note, the non-profit cannabis group NORML discussed how the cannabis industry, which contributes to job growth in the US, also deserves protection and insurance during these uncertain times.
For now, the cannabis industry could see some help from the congressional Families First Coronavirus Response Act, which got signed into law last week. The act gives the government in individual states the freedom to decide which industries are legally eligible to receive benefits. However, lawmakers have to be lenient with the rules for the cannabis industry to receive any kind of help.
Currently, marijuana legalization efforts have stopped. The global coronavirus pandemic has caused lockdowns in many cities. As a result, the CDC has canceled all large gatherings and public events. So, marijuana campaigns and collecting signatures for the 2020 ballot have stopped. However, some states are trying to collect signatures online.
Meanwhile, the cannabis industry saw some positive movements in the stock performance last week. The sudden spike in marijuana sales has boosted cannabis stocks. They were trading in the red after Hexo delayed its earnings. At 10:39 AM ET today, the Horizons Marijuana Life Sciences ETF (TSE:HMMJ) has risen 1.5%. Meanwhile, Hexo stock has fallen 7.1%, while Aurora Cannabis (NYSE:ACB) stock has fallen 5.2%. Aphria is trading 0.99% higher, while OrganiGram is trading 3.1% lower today. Sundial Growers has fallen 10.9%. Meanwhile, Canopy Growth (NYSE:CGC)(TSE:WEED) has risen 2.7% today.