The Canadian cannabis industry has gained access to COVID-19 federal relief funds, but the money comes with a catch: The dollars are distributed through banks, which often refuse to work with weed businesses.
The Business Development Bank of Canada (BDC) announced all legal businesses would be eligible for the Business Credit Availably Program on Monday, which is a 180-degree turn from its previous blanket refusal to work with cannabis companies.
Read more: Justin Trudeau’s business bailouts gives cannabis the cold shoulder
Businesses now have access to $40 billion in new credit, which is made available through the BDC and the Export Development Bank via the Canada Emergency Business Account and Small and Medium-sized Enterprise Loan and Guarantee Program.
Businesses are being told to apply through their bank, and will be able to get loans up to $6.25 million — 80 per cent of which will be provided by the BDC and the rest from their bank.
That’s a step in the right direction, but is still limiting because a lot of cannabis companies struggle to find a bank that will work with them, said Courtland Sandover-Sly, president of British Columbia’s Independent Cannabis Association (BCICA).
“The banks have the right to work with people on a case-by-case basis; they don’t have to take your business. And they seem to really exercise that judiciousness, or that right, when they deal with the cannabis industry,” Sandover-Sly said.
The BDC has come around, which is good, and credit to the industry groups who made this happen, but, there's a catch:
"Applicants must go through their own banks to access the program."
Cannabis business can barely get bank accounts at the big banks rnhttps://t.co/Z4oikgvjxH
— Courtland Sandover-Sly (@C0URTLANDS) April 5, 2020
When he tried to open a bank account for the BCICA, he was turned away Canada’s largest banks and a number of credit unions too because the association had the word cannabis in its name, he said.
“If a not-for-profit that conducts no cannabis business whatsoever had such a hard time, I can only image what people walking in off the street are encountering,” Sandover-Sly said.
The industry should take this small victory and use it as a spring board to tackle the larger institutional problem of unequal banking access, Patrick Moher said.
Moher is the co-founder of Alan Aldous, a cannabis and psychedelics public relations firm that helped create Legal Tender, a coalition that called for the weed industry to be given equal access to federal relief funds.
Read more: New weed industry coalition demands access to federal relief funds
The coalition wanted the BDC to trash its blanket ban against cannabis, which it did, and include the weed industry in relief funding, which it also did, Moher said.
But the government hasn’t yet met Legal Tender’s third request, which is for continued support and fair treatment. Equal footing for cannabis companies means they can access tax benefit programs, credit facilities, loans and everyday banking.
“It shows that they’re listening and it shows that we have a dialogue and having an impact rather than old man yells at cloud and gets nothing done,” Moher said.
The BDC funds won’t save all cannabis companies, Sandover-Sly warned.
There isn’t any funding support options for compassion clubs, businesses that aren’t yet operational or anyone operating in the illicit market, he said.
Businesses also have to prove they have experienced operational losses, so companies that have laid off staff or scaled back production will easily be able to show that, but Sandover-Sly said it’s harder for companies still getting things off the ground.
💔 I've founded a few businesses in my time, and it's always a challenge getting things off the ground. Our team at @mihicannabis made it through a delayed market opening & two frustrating lotteries before a pandemic finally led to the team being disbanded. pic.twitter.com/BIsCyDNuvv
— Tabitha Fritz (@PenelopesWrist) April 6, 2020
Tantalus Labs CEO Dan Sutton, who first raised the alarm that the BDC wasn’t working with cannabis when his company’s proposal was rejected March 13, applauded the new policy.
“This 180-degree reversal in policy from BDC regarding cannabis industry inclusion is a critical step in bolstering the strength of our infant industry through unprecedented challenges,” Sutton said in an email. “I believe it will enhance enterprise and industry survivability if it is administered as intended.”
Top image of trimmer inside Tantalus Labs’s SubLab facility by Nick Laba July, 2019
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@missmishelle
