Last month, Canadian cannabis operators were outraged when Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) initially said that the industry would not qualify for business loans and other assistance aimed at boosting the economy during the COVID-19 crisis.
Since that time, the BDC has worked with the industry to amend its policies and has officially clarified its stance.
In an April 6 statement, the BDC said that all legal businesses will be eligible for the Business Credit Availability Program (BCAP), which includes access to the Canada Emergency Business Account and the SME Loan and Guarantee Program.
“When the policy was originally written, cannabis was not included as an industry that would qualify for it,” John Carle, executive director for the Alberta Cannabis Council, told Cannabis Business Times. “In our conversations with the government and the BDC, it wasn’t a specific exclusion, it was just that the policies and exclusions were written before our industry existed. It took us about two or three weeks to get them to adjust the policy to address our sector. … [Then] they didn’t specify industries, they just [allowed] everybody [to qualify], which was a really good thing for everybody.”
“We were very excited about BDC,” added Nathan Mison, VP of Government, Media & Stakeholder Relations for Fire & Flower, which operates dispensaries across the country. “I think it was really important to have the cannabis sector to be treated like every other business in Canada, so we were glad that all the other instruments provided to every other business were made available to the cannabis sector.”
The Canada Emergency Business Account provides qualifying businesses with loans of up to $40,000, and up to $10,000 of those funds would be eligible for complete forgiveness.
To access the loan programs, business owners must contact their financial institutions, according to the BDC’s statement.
Ottawa has also rolled out a wage subsidy program that will pay 75% of employees’ salaries for companies who have seen a 30% or more decrease in revenue, in an effort to keep workers employed during the pandemic.
“The government looks at it two ways,” Carle said. “They could provide the subsidy, or they could put them on employment insurance, which pays about 55% of their salary. … It’ll cost the government less money, but more importantly, it’ll allow these companies to get back in business very quickly.”
Keeping workers employed is critical for the nation’s economy, Carle added, because those who are laid off and ultimately get new jobs after the COVID-19 crisis will be probationary employees at their new companies and therefore unable to qualify for mortgages and car loans, which would continue to wreak havoc on the economy.
“Under this program, the government’s theory is that everyone will go back to work where they were before, and the economy will pick up where it was before,” he said.
While these programs will undoubtedly help the cannabis industry stay afloat during this uncertain and unprecedented time, some of the BDC’s policies may still pose challenges for businesses looking to access relief, and advocates must continue to communicate with government officials to educate them on the industry’s unique situation.
“The subsidy is a wonderful thing,” Mison said. “The challenge is that it doesn’t recognize high-growth companies, and there are a lot of high-growth companies in the cannabis sector. Fire & Flower, for example, from March 2019 to March 2020, has opened 30 stores. In that time, as you can imagine, our revenues have not gone down by 30%, just due to new stores coming to market.”
The launch of Cannabis 2.0 last year has also created rapid growth opportunities for the industry as it rolled out new product categories, Mison added.
“We’ve asked for the definitions to be changed so we can make sure that all businesses are included [and so], instead of putting people on employment insurance, we keep them employed,” he said. “We think an incredible wage subsidy program is a way to do that. We understand that a government that rolled out a plan in a week probably didn’t take every consideration into account about how it should be applied, and they’ve been very forthcoming about listening to suggestions and opportunities to amend the program to make sure more businesses are included.”
Industry stakeholders have also been advocating for Canada to defer its cannabis excise tax and Health Canada’s administrative charge to keep that money in the hands of businesses during the COVID-19 crisis.
“That would put real money in the hands of companies who need it right now,” Mison said. “Instead of paying out that money on a monthly basis, that money would stay in their hands and allow their operations to continue to operate while they’re waiting for [the] wage subsidy and BDC [programs].”
Overall, Mison is optimistic about the government’s response to the cannabis industry’s concerns, as well as the broader outlook for businesses on the other side of the pandemic.
“The government has been very accommodating to listen, and this is unprecedented, so they’re moving at a breakneck pace and the cannabis sector is coming together to make sure we’re responding at the same pace to keep the cannabis sector in mind and included when we’re rolling out these programs,” he said. “I think it’s very encouraging. I’m very proud of the city I live in, the province I live in and the country I live in, and I think they’ve been very responsive to the legal sector. I really believe that the legal cannabis sector will be one of the legal sectors that fuels economic growth when we come out of this pandemic."