As Prime Minister Justin Trudeau pledges $10 billion in relief funds to prop up Canadian businesses in uncertain COVID-19 times, cannabis companies and their employees are being told that, for now, the cavalry isn’t on its way.
On Monday Tantalus Labs CEO Dan Sutton tweeted his company’s application for government relief funds had been rejected because the Business Development Bank of Canada (BDC) was “not authorized to do business with cannabis companies.”
So BDC just let us know regarding COVID relief for businesses that need to compensate employees in quarantine and may face operational shutdown, "we are not authorized to do business with cannabis companies."
Is our workforce different than any other Canadian business?
— Dan Sutton (@DSutton1986) March 16, 2020
The relief funds are part of a $10 billion Business Credit Availability Program that Trudeau announced on Friday to bolster the economy during the COVID-19 pandemic. The money will be distributed to the private sector through two Crown corporations, the BDC and Export Development Canada.
Except, apparently the federal funds won’t be going to cannabis companies.
When Mugglehead asked the BDC why that was, spokesperson Jean Philippe Nadeau would only say, “We are evaluating the situation as it evolves, including the needs of entrepreneurs and the impact on specific industries.”
That’s a stance that doesn’t make any sense, Sutton said in an email, because weed companies are no different from any other company trying to protect its employees and keep its doors open.
“In protecting our employees’ health and safety, cannabis companies may face quarantine-related operational shutdowns leading to crop loss,” Sutton said. “Small companies rely on selling cannabis as it is harvested, and an interruption of this cashflow reasonably puts us at risk of continuing to operate.”
And it’s not like grow facilities can just close their doors and keep all of their employees home, he added — not with millions of dollars worth of live weed plants currently being cultivated.
Without relief funds, ‘small and lean’ companies stand to lose if supply chain disrupted
Habitat Craft Cannabis Ltd. is one of those small companies worried about how a hiccup in the supply chain could impact the business.
The small team of nine full-time employees celebrated their first harvest two days ago from its aquaponics grow, brining in around 40 kilograms of flower, CEO Rudi Schiebel said.
But as retail stores start closing their doors to keep employees safe, Schiebel said he’s worried what would happen to Habitat if it couldn’t sell those 40 kilograms.
“We run very small and very lean,” he said, adding the company would do everything it could to maintain its payroll and avoid layoffs if possible.
“But also know there is a limit to how long we can sit in limbo without having product rolling out,” he said.
For now, staff are being encouraged to closely monitor their own health, use hand sanitizer and stagger their shifts to implement social distancing, Schiebel said.
Schiebel heard from several other companies that the BDC is rejecting applications from cannabis companies for relief funds, but he will still be submitting an application for Habitat.
That way, if the BDC receives enough pressure and decides to reconsider its stance, the company will have already applied, he said.
Schiebel wasn’t surprised to hear the Crown corporation was turning cannabis companies away and figures it’s just operating on old, pre-legalization policies.
The BCAP has funds to hand out but that doesn’t mean it was mandated to change how it looks at the cannabis space, he said.
But that’s not to say all hope is lost. The government could be preparing to offer funds through Farm Credit Canada, another Crown corporation dedicated to agriculture, he added.
Sutton also voiced cautious optimism, and said the government could nominate a different branch to help prop up weed companies in the months, or even quarters, ahead.
“We hope that the government of Canada appreciates the cannabis economy’s contribution to our GDP, and can come to our aid so that we do not have to choose between employee safety or protecting their jobs,” Sutton said.
Cover image: If Tantalus Labs was forced to do a quarantine-related shutdown to protect its employees (pictured) there could be huge crop loss, CEO Dan Sutton said. Photo inside Tantalus Labs’s SubLab facility by Nick Laba July, 2019