Pandemic is a Disaster for the Poor
And How the Cannabis Industry Must Respond
The long-term impacts of the pandemic will be staggering. Millions of people are filing for unemployment, and the numbers are increasing. The war on drugs has locked predominantly black and brown communities in a cycle of poverty. When the lives ensnared by this cycle are further strained by a pandemic, the outcomes are tragic.
Poverty feeds into illness. Factors such as unaffordable health care, less access to nutritious foods, a lack of education about preventative health care, and hazardous working conditions lead to chronic diseases.
Underlying health conditions increase the likelihood of COVID-19 infection. Research shows that poverty is a risk factor for chronic lung disease and asthma, heart disease, diabetes and obesity, chronic kidney disease, liver disease, and immune dysfunction. Poor people are also at increased risk of mental illnesses, which exacerbate poverty as well as other health disorders. These underlying conditions make the poor more vulnerable to infection and are likely to intensify the severity of the virus’ symptoms.
The poor are disproportionately likely to catch COVID-19 and die from it. They are also more likely to spread it, even to those in more affluent communities. This reality reflects this painful legacy of slavery in the United States: poor people are the most marginalized in the country. At the same time, they are essential to its survival.
The ability to work from home is not universal. Each state’s list of “essential businesses” is evidence of this. These lists also reveal how important low-paying jobs are to the country’s ability to function.
While health care practitioners are worthy of the praise they receive for their efforts during this crisis, they are not the only people keeping all of us alive. Hospitals would fall apart without environmental service workers, the employees responsible for cleaning and disinfecting patient rooms, hallways, and public areas.
Health aides, repair workers, food service workers, grocery store employees, sanitation workers, delivery drivers, mail carriers, and childcare providers continue to deliver services that enable everyone else to live relatively comfortable lives. But these workers are disproportionately brown and black, and they are working in dangerous conditions for low-wages and little to no benefits. They are also contracting and dying of the virus at much higher rates than whites.
The myth of the American dream promises economic prosperity if you just work hard enough. There is ample evidence disproving this idea. When a people is stolen and forced into violent slave labor, rejected from society and disenfranchised post-slavery, targeted and torn apart by a false “war” on drugs, poverty is inevitable. Disease is inevitable. It is not up to the survivors of this trauma to end it. It is the responsibility of those in power to use their resources and advocate for the vulnerable.
Prohibition Blocks Access to COVID-19 Relief Funds
Federal cannabis prohibition makes cannabis-related businesses ineligible for Small Business Administration (SBA) loans even though these businesses are required to pay federal taxes. Such cannabis businesses are defined as those that are “plant-touching” as well as businesses that make any part of their gross income from a plant-touching cannabis business. This includes businesses that provide cannabis testing, sell grow lights or hydroponic equipment to cannabis businesses, or sell smoking or inhalant devices that could be used for cannabis. It also includes businesses that provide accounting, legal, or security services to cannabis businesses.
In addition to regular SBA loans, federal prohibition blocks plant-touching and ancillary businesses from accessing the benefits provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Through the SBA, the CARES Act provides small businesses with the resources required to “maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead.” It also provides businesses with 500 employees or less a direct loan of up to $10,000 for the loss of revenue as a result of the pandemic.
Because cannabis is federally illegal, both businesses that directly and indirectly deal with the plant are ineligible for SBA loans, including those provided by the CARES Act. This is particularly harmful for minority-owned businesses that are underrepresented in the industry due to a lack of capital and a fear of associating with cannabis. The war on drugs devastated minority communities, creating economic, cultural, and emotional barriers to entering the industry.
The federal legalization of cannabis would make cannabis businesses eligible for SBA loans, allowing job and economic growth in an industry that has shown explosive potential despite federal prohibition. It would also create a new avenue for minority business-owners to access capital needed to launch and sustain a cannabis business.
Some politicians are putting a pause on their cannabis legalization movements in response to COVID-19. This is a mistake. Now is exactly the right time to push for legalization. People need jobs. With some financial assistance, the cannabis industry can continue to provide them.
Why Cannabis Corporations and Investors Should Address Poverty Now
The ineligibility for CARES Act relief funds has put many small cannabis businesses in a difficult spot. However, larger cannabis corporations such as Curaleaf, Acreage holdings, and Harvest Health & Recreation—3 of the country’s top multi-state operators (MSOs)—are still in a position to address social equity issues.
Cannabis dispensaries and retail stores have been labeled as essential businesses. This sends a powerful signal about the future of cannabis. National legalization seems imminent. If MSO’s use this urgent time to show the country how their businesses can provide economic relief and opportunity to the poor, it will strengthen the case that the time of cannabis prohibition must come to an end.
MSOs can make it policy to partner with minority-owned businesses operating in communities negatively impacted by the war on drugs. They can elevate these local businesses in their supply chains. They can sponsor entrepreneurs from these communities at business conferences. They can extend their philanthropic arm toward organizations and causes that benefit disadvantaged communities. They can provide jobs to returning citizens who will undoubtedly face even more obstacles to employment as they compete with millions of people laid off as a result of the COVID-19 outbreak.
Additionally, the pandemic has raised the need to address urgent equity considerations including:
a lack of access to basic needs like water, nutritious food, and sanitation supplies
the forced choice of essential employees to either not pay bills or expose themselves to the virus with minimal to no PPE
exacerbated mental health symptoms and substance abuse due to isolation and stress
a lack of student access to internet and technology for remote schoolwork
a lack of access to affordable medical insurance to cover COVID-19 testing and treatment
This is not a comprehensive list. The needs are extensive. But there are professionals who are ready to help investors and businesses strategize responses to them. Cannabis businesses that partner with organizations like Marijuana Matters can develop policies that address the specific needs of the local communities they are working in as they navigate surviving this pandemic—and surviving the poverty created by the war on drugs.
Investors who put their money in corporations that make these kinds of moves will send a signal to the entire industry that social equity is important. Promoting social equity as a business model is compassionate, but it’s also strategic. Creating policies that will benefit the poor and broadcasting that implementation will:
reinforce a narrative that supports social equity
practically create avenues out of poverty for those who have been targeted by racist drug laws
leverage social responsibility to promote the brand
improve local economies
reduce the impacts of poverty on the national economy and the spread of disease
Research shows that most consumers care about social responsibility. People want to feel good about the products they are buying. If given the choice between two identical cannabis products, one sold by a company supporting social equity and one that doesn’t, most consumers will choose the former.
The need to address poverty was not born out of the COVID-19 outbreak, but the pandemic has magnified the urgency to respond. This global crisis has resulted in a radical departure from what we consider “normal.” Cannabis industry leaders can make the most of this opportunity and pursue a radical transformation of enterprise.
How You Can Help
This pandemic has made our lack of control obvious. But we are not helpless. There are things that readers like you can do to make a difference in the lives of the most vulnerable.
Call your local and state representatives. Use your phone and your voice to partner with social equity advocates such as Marijuana Matters, the Minority Cannabis Business Association, Supernova Woman, the Hood Incubator, and the National Diversity Inclusion & Cannabis Alliance. These organizations are requesting that Congress include cannabis operators in the next COVID relief bill and make social equity amendments to the PPP loan program.
Urge your legislators to push for the following social equity proposals in the next COVID relief bill:
The eligibility of state-licensed cannabis businesses for COVID relief funds
A mandate requiring banks and the SBA to accept applications from businesses owned by individuals with former convictions
The use of gross receipts rather than payroll as a qualifying metric in order to include owner-employee run operators that do not have a payroll
A financial incentive to banks and the SBA for their performance in achieving the program’s diversity goals
Sign this petition. Unless congress includes equity operators in the next COVID relief bill, the most vulnerable populations in the cannabis industry will not survive.
