On Tuesday, a new $3 trillion coronavirus relief package was unveiled by House Speaker, Nancy Pelosi, with the inclusion of a long-awaited banking reform for the legal cannabis industry. However, despite the bill including more relief for impacted businesses, cannabis companies might not be eligible for these funds.
The cannabis industry has been a cash-only industry ever since its legalization in 1996, due to the outdated federal banking laws. While the laws were intended to curb money laundering by illegal drug cartels, it didn’t foresee the state legalization of cannabis, which is why within the context of federal banking laws, a grower or retailer, although licensed by a legal state, is still seen as an illegal drug runner.
Consequently, at most legal stores, customers are unable to use credit or debit cards, and some workers in the industry are unable to get car or home loans. While smaller banks and credit unions in some states offer simple deposit accounts for state-licensed cannabis businesses, they are accompanied with extremely burdensome documentation requirements which cause the maintenance to be expensive.
The bill is named the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act, and consists of 1,800 pages, regarding the next phase of COVID-19, which will help with the current public health and economic shock in the country.
Small business relief that cannabis companies could access, were not included in the new bill, right after the denial of previous rounds of coronavirus relief funding due to the illegal status of cannabis under the federal law. Furthermore, cannabis companies were prohibited from applying for federal COVID-19 relief funds, by an outdated Small Business Administration (SBA).
More than 40 members of Congress had signed multiple letters to Congressional leaders, in late April, for the demand of the reformation of SBA. Furthermore, a legislation to address the problem was introduced by Rep. Earl Blumenauer (D-Oregon), and members of Congress were urged for the reformation by a coalition of the reformation of advocates along with criminal justice and civil rights groups.
According to NORML Political Director Justin Strekal, cannabis businesses have been deemed essential in most states, and have been told by the Congress to close down and fire their employees, while also facing tough economic times.
The funding could benefit the cannabis workers nationwide, greatly. According to a national survey, nearly one-third of cannabis companies had said that without the COVID-19 relief funds, they could possibly go out of business. The survey was conducted across all legal states between April 20 and May 5,2020, on 484 cannabis retailers, growers, processors, and hardware and service providers, where 85% claimed that the stimulus money could save their jobs.
According to the executive director of the National Cannabis Roundtable, Saphira Galoob, like other small businesses, cannabis businesses are no exception of the lack of critical financial tools and reliable banking services, which if provided, could potentially remove the hurdles that hold back the potential of the fastest growing sector of the US economy.
The language of the SAFE Banking Act within the HEROES Act was folded by House Democrats , which would allow banks and other financial institutions to, without any fear of federal reprimand, safely work with legalized cannabis companies. Stalled in the Senate, the SAFE Banking Act passed the House in September 2019.
A specification is made in the bill, that the penalization “or otherwise discouragement” of a bank from providing services to a cannabis company, or state and local authorities (responsible for the regulation of the cannabis industry), shall not be allowed for federal regulators.
Individual workers are provided protection as well, as the recommendation or encouragement of banks to refuse or cancel personal accounts of clients, working for licensed cannabis companies, by federal regulators, is prohibited in the bill.
The full bill is available here.
Recession Cannabis – Businesses Launch Smaller Joints and Less-Potent Buds
The coronavirus has caused job losses. Consequently, deals have spiked on common items such as apparel and take-out refreshments. However, the trend has extended to another category in many states i.e cannabis.
Dispensaries in states with legalized recreational and medical cannabis have been taking steps hoping for consumers to keep coming back. The steps include regular discounts and starting further sizes of merchandise.
Cresco Labs is a company in Chicago that has newly launched cannabis merchandise in bulk, calling it “High Supply.” Their Senior Vice President of brand marketing has stated that this is another response to the world we live in now.
Cannabis businesses are constantly trying to maintain the state-mandated social distancing standards, along with the added cutbacks in discretional spending. Consequently, the stakes are high for the upcoming cannabis industry. Trades were going well before the pandemic began. Cannabis data from BDS Analytics has shown an estimation of an increase of 34% in 2019. Meanwhile, the expected increase is 32% in 2020.
Illinois began 2020 with the legalization of recreational cannabis. Furthermore, several others, distinctly New York, are expected to join. The prime focus for businesses right now is to find a way to attract cost-conscious customers.
Cresco’s High Supply line is sold in different colored cardboard boxes with different products. The products include half-gram rolled joints rather than the regular full gram and smokable popcorn buds which are smaller with less potency that the full-puffed buds.
High Supply was planned earlier before COVID-19. The recent director of consumer engagement for PepsiCo’s Gatorade unit, Rothschild, had stated that it was Cresco’s attempt to build its trademark portfolio with a resemblance to a PepsiCo (PEP) or Procter & Gamble (PG) of cannabis. He added that they underestimated the acceleration of the need.
Cresco owned a flagship line and Reserve line. However, Rothschild stated that they had a need for a newcomer in the benefit classification. High Supply is currently 20% cost-effective in comparison to the Cresco tag.
Following the outbreak, the California launch of High Supply focused primarily on the summertime, was pushed up to the beginning of April.
Bethany Gomez stated that in consumer response, price limit, and strength play huge roles. Bethany is the supervising director of the cannabis industry research company Brightfield Group.
Previous to COVID-19, the focus for cannabis businesses was the attraction of “canna-curious” and the addition of new consumers in the industry. However, Gomez says that those people aren’t very keen on spending as much.
During a slowdown, the industry will be focusing on people who view cannabis as a necessity and want a good high.
Employing cannabis loyalists are essential for the sustenance of the legal cannabis market. The rise of further discounts and value choices could assist with the prevention of customers from the illicit market. The illegal market could potentially undermine the pricing of authorized retailers as unregulated purveyors have a lack of additional costs for taxes and testing.
Gomez says that while this is a challenge in markets now with higher production costs, it would help in balancing the legal industry. This implies that companies selling the best of cannabis must readjust.
Colorado is the US state with the first established recreational cannabis industry. Lightshade‘s dispensaries in Colorado have adapted themselves to assist the higher-end purveyors of cannabis and petite-batch connoisseurs.
However, the company launched budget-friendly offerings, due to its latest 40,000 square-foot greenhouse. Lightshade further started a real for smokable cannabis buds with approximately half the earlier offered price. The company’s director of marketing, Lisa Gee says that they are hoping that the discount on the flower would work as an attraction for consumers looking for value.
Researchers Say that Hemp Oil Can Treat Chronic Neuropathic Pain
The effectiveness of the consumption of hemp oil which is derived from the cannabis plant is being studied by researchers with the use of a severe neuropathic pain animal model. Researchers at The University of New Mexico have concluded that licensed cannabis hemp oil reduced the mechanical pain responsiveness for many hours in mice with existing persistent post-operative neuropathic discomfort.
Hemp, while unique from its still widely criminally banned cousin, refers to cannabis plants that have 0.3 percent tetrahydrocannabinol. Furthermore, under federal law, production, and consumption of hemp are legal in the majority of regions across the U.S, due to the Hemp Farming Act. The U.S. Congress introduced the Act and President Donald Trump signed it into legality in 2018.
Millions of Americans are given the accessibility to an organic, effective, and comparatively safe alternative for the treatment of chronic pain, due to the major step in cannabis prohibition.
Traditional pharmacological drugs, or particularly opioids, have been the leading figures of preventable deaths while traditional medicinal faults are the third leading cause of death in the US.
The University of New Mexico carried a range of recent researches that have examined the effectiveness and safety of the consumption of the cannabis plant. However, this would be the first research to estimate the healing potential of legal hemp oil with low THC levels.
Co-researcher and associate professor in the UNM Psychology Department, Dr. Jacob Miguel had explained the research. He explained that despite cannabis plants with low THC being psychoactive, they allow serious and prompt aid from symptoms such as pain, anxiety, and depression while ending in fewer psychedelic experiences.
Researchers used a chronic neuropathic pain model to study how hemp oil impacts temporary pain sensitivity to the afflicted region. The model gave mice the vulnerability to post-operative neuropathic pain, which was equal to many years of chronic pain in human clinical patients. The mice showed efficient pain relief, even numerous hours after cannabis consumption. Hence, they neared the mechanical pain sensitivity of the control mice that didn’t experience the surgical procedure.
One of the lead investigators, Dr. Karin N. Westlund; Department of Anesthesiology, explained the research in their article. The article was titled “The Therapeutic Effectiveness of Full Spectrum Hemp Oil Using a Chronic Neuropathic Pain Model” and was published in the journal, Life.
Due to their ability to avoid human biases and likelihood outcomes, or perceptual and cognitive results to entry in cannabis-themed trials, researches in animals could potentially be superior to clinical trials. Numerous researches estimating the outcomes of cannabis in humans involve observation of subjects with statements of psychedelic experiences, irrespective of them receiving the actual cannabis agent or not, commonly regarded as the placebo effect.
The research focused on the effectiveness of “LyFeBaak” hemp oil, manufactured by Organic Energetic Solutions. LyFeBaak is legally available for purchase in New Mexico since 2019. The co-author and hemp grower, Anthony L. Ortiz, explained that their company grows hemp with optimized conditions to release the plant’s utmost health and vitality, with the help of hypermineralization techniques.
He adds that however, the growth of plants in a state of fight-or-flight is common in the cannabis industry. He continued that these techniques have supported them to produce effective hemp products for patients, who have stated its effectiveness for several mental and physical health problems. Anthony has stated that the new variations in hemp laws will now help them put these claims to the test.
However, long-term use of hemp oil is warned by the authors, mostly focusing on the traditional federal prohibition laws in the U.S. Vigil claims that the legal accessibility for an ordinary citizen, to an organic and effective medication with easy and cost-effective production, makes this an extremely intriguing time in advanced medical discovery.
New U.S. Stimulus Bill – Cannabis Businesses to Get Banking Access
With gravity, the U.S. government stimulus program has aimed to support smaller firms in the nation to hold on until reopening seems likely. Possibly the most apparent example is the Paycheck Protection Program (PPP). Provision of over $600 billion in forgiveness loans, is intended by the PPP, to small and medium-sized businesses (SMBs). SMBs dealing with authorized cannabis are one of the ineligible SMBs for PPP loans.
The Wall Street Journal recently reported that an initial high demand was seen in licensed cannabis businesses, for their wares, after the start of the pandemic, and additional sources of funding weren’t required. Director of global expansion at DNA Genetics Inc. and California-based cannabis producer, Rezwan Khan reported to the paper that the public stockpiled cannabis like toilet paper.
Despite the differing degrees of the legalization of cannabis in 33 states, the federal government still declares it as illegal. Furthermore, legal cannabis firms were declared ineligible for funds by the U.S. Small Business Administration (SBA).
The struggles for the continuation of operations are growing for the cannabis industry, like any other business landscape that is controlled by smaller firms. Consequently, Congress has extended support for licensed cannabis businesses.
The plan is to allow access to conventional banking ways that are currently closed to cannabis businesses due to their sales being labeled as a criminal operation by the federal government. Consequently, cannabis companies have been compelled to trade in cash only.
However, a $3 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act was recently established by the U.S. Democrats. The plans to potentially support cannabis companies for loans and access to conventional banking services were also added.
Contents from the proposed Secure and Fair Enforcement (SAFE) Act were added to the HEROES Act, by the Democrats. This could lead to cannabis businesses gaining access to the conventional U.S. banking system.
Last September, the House passed the SAFE Act. However, it hasn’t evolved into a law. Instead, ever since, it has been held up in the Senate controlled by Republicans.
However, Section 11006 of the HEROES Act, entitled “Safe Banking,” has declared that federal laws will permit banks and other monetary services to assist cannabis companies and will hold them accountable on transactions or interests across deposits, checking and lending.
Furthermore, with the potential hope towards the cash element of the cannabis industry, there are other intriguing factors. The proposed legislation has further states that its purpose is the increase and privatization of public safety with the certainty of access to monetary services to licensed cannabis-related businesses and service providers. It also stated its aim for the decline of the amount of cash at such businesses.
A letter was signed by thirty-four attorneys general and addressed to Senate and House Congressional leadership. The AGs disputed that in reference to legal cannabis, there are 3 key respects with which the legislative relief was distinctly directed by the coronavirus pandemic.
They further recorded that competence can be improved in the accumulation of tax revenue, for state and local governments. They further added that there has been an escalation in threats to public safety due to the cash-intensive business models claiming for it to be the common target of criminal activity.
However, the AGs further addressed that law enforcement, tax regulators, consumers, and patients, are all susceptible to an intensified risk of the vulnerability to the deadly virus, due to the presence of huge cash sales.
However, there is ambiguity in its fate in the Republican-majority Senate, despite the passing of the HEROES Act by the Democratic-controlled House. The measure was called “a list of pet priorities” by the Senate Majority Leader, Mitch McConnell, stating no urgency of immediate action.
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