Will cannabis companies get a sniff of COVID-19 cash?

As relief funds flow, the Business Development Bank of Canada says that it’s “not authorized to do business with cannabis companies”

COVID-19 physical distancing requirements have set back production cycles at cannabis operations.

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In the wake of COVID-19, businesses across Canada are struggling to keep their doors open. The cannabis industry is no exception, and many licensed producers are beginning to feel the pinch.

On Monday, March 16, CEO and founder of B.C.-based grower Tantalus Labs Dan Sutton took to Twitter to argue with the Business Development Bank of Canada (BDC) – a Crown corporation mandated to help develop small and medium-sized companies. BDC had already gone on the record to share with Sutton that they are “not authorized to do business with cannabis companies,” and that they would not be providing COVID relief. “Is our workforce different than any other Canadian business?” Sutton asked.

The reality is, it’s not.

As of July 2019, Canada’s cannabis sector contributed $8.26 billion to the country’s GDP, according to Stats Canada. That’s a steady increase from previous months, after the industry witnessed hundreds of layoffs at two of its biggest players.

As the pandemic evolves, Canadian public health officials continue to change their guidelines on what lockdown procedures need to take place and how strict they need to be. Because of this, cannabis companies are being forced to potentially lay off more workers and implement social-distancing policies that interrupt the production cycle and impact their retail hours and customer service.

Hugo Alves, cofounder and CEO of Auxly Cannabis Group says, “I can’t think of a link on the supply chain that isn’t potentially impacted by this pandemic.”

On March 23, more than 70 cannabis firms and organizations, including the Canadian Chamber of Commerce’s National Cannabis Working Group and the Cannabis Council of Canada, released an open letter addressed to Finance Minister Bill Morneau and Industry Minister Navdeep Bains.

It asks why the BDC has expressed they will not extend access to a $10-billion stimulus package for small and medium-sized businesses announced under the government’s COVID-19 Economic Response Plan. The package was increased today in a major announcement made by the government. It will to now cover 50 to 75 per cent of the payrolls of small and medium-sized businesses.

In response to the letter, a BDC spokesperson told Yahoo Finance Canada that the BDC is developing details on how the stimulus package will work and will share an update in the coming days, but declined to specify if the cannabis sector will be allowed to participate.

The letter points out that the industry already has limited access to capital and credit and that “Canada’s cannabis industry has weathered several shocks in the past six months, including the loss of over 2,000 well-paying jobs in the sector. COVID-19 has added another significant impact, both with our suppliers and our workforce.”

Mimi Lam, CEO and cofounder of Ottawa-based retail shop Superette, says the industry continues to face economic stigmatization. “These are entrepreneurs that have been working really hard to create a business for themselves in an already federally legal industry, and they’re being shut down.”

The fact that the BDC won’t provide a clear answer on funding comes as a bit of a shock, she says, when just this past Monday, Premier Doug Ford listed cannabis retailers on Ontario’s list of “essential workplaces.” And just last week, the Ontario Cannabis Store reported an 80 percent increase over typical Saturday sales.

James Jesty, president of the Friendly Stranger cannabis culture chain, points out that “the legal cannabis market is to eliminate the illicit market, and all of a sudden a cannabis store may close or not be able to open because of lack of financial support and those customers will turn to the illicit market.”

With the Friendly Stranger operating click-and-collect stores in Burlington and London, he further shares, “You know, the industry is not looking for anything special. Just access right now, and we’ve basically been told by the BDC that they won’t do business with cannabis, which is a legal business in Canada.”

Says Alves: “I don’t want to speak for the BDC, but it’s worth noting that cannabis has gone from illegal to being declared essential in just 18 months. We hope that the BDC can positively align on the importance of a strong and healthy cannabis sector for Canadian jobs and to achieve the important policy objectives of the federal government.”

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