A second Crown corporation tasked with helping prop up the Canadian economy during the COVID-19 pandemic is giving cannabis companies the cold shoulder.
On Monday, Justin Trudeau announced Farm Credit Canada was being given an additional $5 billion in lending capacity to help keep producers, agribusinesses and food processors open for business.
Farmers can also open additional lines up credit up to $500,000 and defer loan payments for up to 12 months, according to the FCC website.
— Marie-Claude Bibeau (@mclaudebibeau) March 23, 2020
“This important measure, which represents $173 million in deferred loans, will help keep more money in farmers’ pockets during these critical months,” read a statement from Trudeau.
But these provisions won’t necessarily help cannabis companies who were holding out hope the FCC would be tasked with helping them keep their doors open.
That’s because businesses applying for relief funds through the FCC have to have been financially viable entities before the COVID-19 pandemic kicked in, FCC spokesperson Paula Kohl said in an email.
“Businesses applying for FCC lending products will be subject to normal lending due diligence, which considers business viability, credit history, and management integrity and experience,” Kohl said.
The FCCs website also notes the Crown corporation is a lending organization but does not provide grants or interest-free loans.
But anyone following the cannabis industry over the past year knows these qualifications could exclude many cash-strapped weed businesses.
On Twitter, Tantalus Labs CEO Dan Sutton pointed out how exclusionary it would be to require companies to be financially sound before offering them loans in extraordinary times.
“There are zero companies in Canada with three quarters of positive cash flow. Tantalus Labs was profitable last year, perhaps uniquely,” Sutton tweeted.
Last week Sutton tweeted his company’s application for government relief funds through the $10 billion Business Credit Availability Program was rejected because the Crown corporation tasked with handing out the loans wasn’t authorized to do business with cannabis companies.
This sparked outrage throughout the industry and has resulted in two letters calling for the federal government to offer financial support to the weed industry.
In one letter signed by 74 industry representatives, Finance Minister Bill Morneau is called on to treat the cannabis industry the same as all other Canadian businesses.
“We are not asking for special treatment, but rather equitable treatment,” reads the letter.
Correction: A previous version of this story said the FCC could open a new line of credit up to $50,000. It can actually lend up to an additional $500,000. The story has since been corrected.
Top image via Deposit Photos.