New York - The International Cannabis Bar Association has asked Congress to allow law firms with cannabis industry clients in states where marijuana is legal to access small business loans under the $2 trillion coronavirus relief bill it passed last month to help them prevent layoffs.
Law firms who derive even a small part of their revenue from cannabis industry clients are currently barred from such loans by the Small Business Association because it classifies them as “indirect marijuana businesses” INCBA president Christopher Davis wrote in a letter sent to Congressional leaders on Monday.
Eleven states have legalized recreational marijuana use by adults since 2012 and many others permit marijuana use for medical purposes, but it remains a controlled substance under federal law.
The coronavirus stimulus bill, the CARES Act, authorized $350 billion in federal loans for businesses with under 500 workers to help offset the economic impact of the pandemic, most of which will flow through the SBA.
A representative of the SBA did not immediately respond to request for comment on Tuesday.
Davis said in an interview on Tuesday that some INCBA members have already had banks deny them CARES Act loans because of their status as “indirect marijuana businesses.” More have been provisionally approved by banks who aren’t aware of the SBA’s rules for indirect marijuana businesses, but because of their status they are technically not eligible and could face criminal penalties for taking the loans, he said.
If small firms that have served cannabis industry clients can’t access CARES Act funds, it’s likely they will lay lawyers off instead of keeping them on payroll until stay at home orders are lifted, Davis said. Many such firms are taking a heavy hit from court closures as litigation work dries up, he said.
INCBA is a coalition of approximately 700 business lawyers and law firms that serve clients in cannabis industries. Its average member’s business is made up of around 30% cannabis-related matters, Davis said.
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