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Ask Our Experts: Hemp and the COVID-19 Relief Package

Q: Does the federal COVID-19 relief package provide for hemp businesses?

By New Frontier Data

A: While the pandemic continues to spread throughout the U.S. and abroad, Congress has passed legislation to help alleviate the unprecedentedly massive financial stresses felt throughout the U.S. economy. Passage of the legislation titled the Coronavirus Aid, Relief, and Economic Security (CARES) Act (i.e., Public Law 116-136) provides $2 trillion in economic relief, including $500 billion in corporate aid and $349 billion in small business loans.

The hemp industry at large is included under its provisions. Per the 2018 Farm Bill, those businesses which produce or sell hemp or hemp-derived products are eligible for relief through Small Business Administration (SBA)-funded services (OMB, 2 C.F.R. § 200.300).

That is not true for marijuana-related businesses, which remain federally prohibited if legal in 11 states with adult-use programs and in 33 states with medical programs.

Regulatory uncertainty surrounding CBD products notwithstanding, the hemp industry is afforded the same legal protections as other industries.

Under the CARES Act, small businesses can apply for loans through the Paycheck Protection Program to cover the cost of expenses like payroll, health care benefits, employee salaries, rent, utilities and interest on mortgage debt. To qualify, businesses must have fewer than 500 employees, been in operation before February 15, and have employees or independent contractors for whom the business had paid salaries, compensation, and payroll taxes.

The coverage period is from February 15 to June 30. Businesses can apply for loans based on their average monthly payroll during the one-year period before the date of the loan, and those eligible may receive loans worth up to 2.5 times their average monthly payroll (but not more than $10 million) during the coverage period.

Other exceptions include:

  • Individual employee salaries exceeding $100,000;
  • Payroll and income taxes;
  • Compensation for U.S. citizens living outside the United States; and
  • Sick leave or family leave for which the company will receive credit under the Families First Coronavirus Response Act.

For specific information, visit this link to the SBA’s Paycheck Protection Program.

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