April 13, 2020
Update on Hemp Opportunities in Federal Stimulus
We are learning every day of new opportunities for hemp farmers and businesses provided by the economic stimulus package, passed by Congress a few weeks ago.
As we previously shared here and here, the federal Coronavirus Aid, Relief and Economic Security (“CARES”) Act provides more than $2 trillion in economic relief in response to COVID-19, including $9.5 billion to the office of USDA Secretary Sonny Perdue. Secretary Perdue and his staff are meeting daily about the process for allocating funds, and there may be an opportunity to submit a proposal on behalf of the hemp industry.
The CARES Act also provides support to hemp farmers and hemp businesses through the Paycheck Protection Program (PPP)—a guaranteed loan program operated by the U.S. Small Business Administration (SBA). According to SBA and USDA’s website, agricultural producers and small agricultural cooperatives (with fewer than 500 employees) qualify for the PPP. Note that under this SBA policy guidance, unlike direct marijuana businesses, legal hemp small businesses are explicitly eligible for SBA’s assistance programs. More information is available here and here.
There has been much confusion about whether hemp farmers and hemp businesses also qualify for SBA’s Economic Injury Disaster Loans (EIDL). SBA has stated that agricultural enterprises are ineligible for the EIDL program, as has been the case historically. However, more than 80 federal lawmakers are pushing back, arguing that they clearly intended the CARES Act to make agricultural enterprises eligible. This issue is unresolved, but we are in touch with our Congressional contacts and expect clarification by SBA or in the next round of COVID-19 stimulus.
In addition to SBA’s programs, the Federal Reserve plans to release up to $2.3 trillion in loans. $600 billion is being directed to the Main Street Lending Program. This program provides loans to small- and mid-size businesses with up to 10,000 employees or with less than $2.5 billion in revenues. The 4-year loans may be granted between $1 million and $25 million and principal and interest payments may be deferred for 1 year. The Federal Reserve is seeking public input on the desired scope of the Main Street Lending Program through April 16.
Stay tuned to this space for further updates on how the CARES Act can help you, your farm, and/or your business.
On Wednesday, Our General Counsel Jonathan Miller will be hosting a LIVE Twitter Q&A at @HempRoundtable at 5:00pm ET. Be sure to follow along and submit your questions in advance!