Apr 07, 2020 (Market Realist via COMTEX) -- Cannabis is illegal at the federal level in the US. However, 33 states and the District of Colombia have made medical marijuana legal. Also, 11 states and the District of Colombia have made recreational marijuana legal. There's a huge demand for cannabis in the US, which means more support for legalization. More Americans, including lawmakers, understand marijuana's health benefits. Marijuana provides employment opportunities and tax revenue to the states. However, cannabis companies don't get federal business relief during the COVID-19 pandemic. Some senators want marijuana businesses to get business relief.
Cannabis sector gets senators' support
A group of key senators supports small marijuana businesses. They want to help the businesses get financial aid. A Marijuana Moment article discussed that 11 senators led by Senator Jacky Rosen have requested financial aid for marijuana businesses. The request was sent to the Appropriations Committee. In the letter, the lawmakers asked the committee to add a provision to give cannabis businesses access to loan services by the federal government.
Other senators who have joined the purpose are Senator Ron Wyden, Tammy Duckworth, Michael Bennet, Kirsten Gillibrand, Bernie Sanders, Ed Markey, Cory Booker, Bob Menendez, Jeff Merkley, and Kamala Harris. Previously, I discussed how Cory Booker, Kamala Harris, and Bernie Sanders support marijuana legalization in the US.
The letter requests that the committee "include report language prohibiting the Small Business Administration (or SBA) from denying loan applications to cannabis firms as part of the fiscal year 2021 spending bill for Financial Services and General Government and Related Agencies."
The group said that cannabis businesses should be eligible for the Loan Guarantee Program, Disaster Assistance Program, and Microloan Program .
Why didn't the marijuana sector get federal business relief?
The SBA provides business relief to small businesses during emergencies. The relief helps companies survive during distressing times. The senators think that small marijuana businesses should be eligible for the loan programs provided by the SBA. Marijuana is illegal at the federal level. As a result, smaller cannabis companies struggle to get any kind of financial assistance. The businesses don't receive any legal benefits. However, they have been contributing to employment opportunities in the states where it's legal. The states also earn millions of dollars in tax revenues. The states use the funds in various welfare programs. According to the senators, it isn't fair that the businesses don't have access any kind of emergency relief.
In Cannabis Sector Won't Get Business Relief amid COVID-19 , I discussed how the SBA stated that the marijuana industry isn't eligible for any business relief during the COVID-19 outbreak. However, businesses that produce or sell hemp and hemp-derived products are eligible. Notably, hemp is legal in the US. Four cannabis groups also sent a joint letter to Congress . The letter requested that cannabis businesses can get financial assistance during this coronavirus pandemic. As I discussed in Coronavirus: Marijuana Industry Asks for Federal Business Relief, the four groups are:
National Cannabis Industry Association
National Cannabis Roundtable
Minority Cannabis Business Association
Global Alliance for Cannabis Commerce and Cannabis Trade Federation
What else is happening in the marijuana sector?
Marijuana sales are rising , which benefits the stocks and the sector. Despite the pandemic, legalization efforts have continued in many states. Mississipi , South Dakota , and Arizona are still moving ahead with their legalization plans. However, New York , Idaho , and North Dakota have suspended their legalization campaigns. Meanwhile, Missouri and Nebraska are still struggling.
Cronos Group and Hexo reported dismal earnings results. Meanwhile, some analysts downgraded Cronos Group stock . In contrast, some analysts like Raymond James still have hope. Even Bruce Linton thinks that Canopy Growth and Cronos Group will be able to survive the COVID-19 chaos. To learn more, read Cronos Group: Analysts Revise Estimates in April and Bruce Linton: WEED and CRON Can Handle COVID-19 Storm .
Today at 12:34 PM ET, Cronos Group /zigman2/quotes/206842762/composite CRON +0.47% and Hexo /zigman2/quotes/200008967/delayed CA:HEXO +6.82% are trading 0.75% and 1.4% higher. Aurora Cannabis /zigman2/quotes/210559470/composite ACB -1.58% stock has risen by 1.4%, while Canopy Growth /zigman2/quotes/200603886/composite CGC +2.66% /zigman2/quotes/202205609/delayed CA:WEED +2.66% has risen by 3.7%. Aphria and OrganiGram have risen by 4.0% and 3.8%, respectively.
Read What Can You Expect from Marijuana Stocks in April? to learn more about cannabis stocks' performance in March and what to expect in April.