Marijuana businesses have been shut out from COVID-19 relief

 

June 25, 2020



Marijuana businesses are falling through the cracks when it comes to economic assistance for COVID-19.

Although pot businesses were deemed essential and allowed to remain open throughout the pandemic, they haven’t been immune to its economic impacts.

Upper valley resident Erika Merklin runs Resurrected Dreams, a state-licensed cannabis cultivation business. She said her business, like many in the Chilkat Valley, is reliant on tourism, which has been decimated by COVID-19.

The pandemic has also made it harder for Merklin to test her product, a requirement under state law.

The state has three marijuana testing facilities—one each in Anchorage, Ketchikan and Fairbanks. These communities were hot spots early in the pandemic while Haines had no confirmed COVID-19 cases until June.

“I chose not to leave the community and stay here and stay safe, and I haven’t been able to make any sales,” Merklin said at an assembly meeting earlier this month.

Merklin’s challenges began even before the pandemic when the state’s ferry system shut down this winter.

“I could not travel to Anchorage or Ketchikan with any assurance I would not be stuck for days to a week, which happened to many Haines travelers this year,” Merklin said.

Her business has had no revenue since January, Merklin said. Without financial assistance, she said she doesn’t have the savings to weather the pandemic and loss of reliable transportation.

Merklin said she considered applying for federal loans and state grants but discovered her business is ineligible. Since marijuana is illegal at the federal level, any business relief program funded through the CARES Act, even those managed by state or local governments, must exclude marijuana businesses.


“I’d like to state how ironic I think this is that our governor deemed cannabis businesses an essential business during (COVID-19) and there is absolutely no funding available for the businesses,” Merklin said, adding that marijuana businesses contribute directly to the state coffers through taxes and licensing fees.

As a marijuana cultivator, Merklin pays $7,000 a year for license renewal on top of a weight-based tax on her product. Since the state began collecting marijuana taxes in 2016, the industry has contributed more than $30 million to state programs and the state’s general fund, and the amount collected has grown each year. Last fiscal year, the state collected $19 million in marijuana taxes, 1.2% of the total taxes the state collected that year.


In a March 26 letter to Gov. Mike Dunleavy and Alaska House and Senate leadership, statewide cannabis trade group the Alaska Marijuana Industry Association requested the state consider implementing an economic relief mechanism for cannabis businesses.

“We would like to remind you that the cannabis industry is a wholly Alaska owned industry, and nearly all operators are considered small businesses. The cannabis industry will be uniquely and permanently damaged if not considered essential and allowed to seek state offered economic recovery assistance,” the letter reads.

Alaska could set up a separate, state-funded program to provide grants or loans for cannabis businesses, but at present, neither the governor nor the legislature is pushing for this outcome.

Sen. Jesse Kiehl said this is largely due to the state’s economic difficulties. For the past few years, Alaska has faced budget deficits, spending down savings accounts to balance the budget each year.

Kiehl said the state has put few, if any, of its own dollars toward COVID-19 relief, and he hasn’t heard any conversations among legislators about making an exception for the cannabis industry.

On Tuesday, the Haines Borough Assembly approved a CARES Act-funded grant program for local businesses and nonprofits. As a marijuana business, Merklin’s is ineligible.


Merklin said the borough could assist cannabis business owners and other business owners currently ineligible for the local grant program by increasing the portion of CARES Act funding directed toward individual assistance. She said she thinks this is the most inclusive way to spend the funds.

“I think more money should be allocated to individuals, rather than businesses. The aim is to help people, and this is the most direct and beneficial way,” Merklin said. Barriers created by federal, state and local governments funnel the money to specific, eligible businesses, she said.

At Tuesday’s meeting, the assembly increased CARES Act funding for the business and nonprofit relief program from $500,000 to $850,000. The borough is expected to receive another $2 million from the CARES Act before the end of the year. Assembly members have said they intend to allocate a greater portion of these future CARES Act dollars toward relief for individuals.

Winter Greens, Haines’ state-licensed marijuana retail store, didn’t respond to requests for comment.

 
 

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