Canada: COVID-19 financial support measures exclude cannabis sector

O Export Development from Canada (EDC) and the Business Development Bank of Canada (BDC) last week drew up a plan of exceptional financial measures to respond to the economic crisis generated by the Coronavirus. In an effort to help the economy, as COVID-19 continues to force businesses to close, the Canadian government will award loans worth $10 billion, but has excluded the entire cannabis industry.

Dan Sutton, CEO and founder of Tantalus Labs, based in British Columbia, wrote on Twitter that the BDC has conveyed that it is “not authorized to do business with cannabis companies.”

So BDC just let us know regarding COVID relief for businesses that need to compensate employees in quarantine and may face operational shutdown, “we are not authorized to do business with cannabis companies.”

Is our workforce different than any other Canadian business?

— Dan Sutton (@DSutton1986) March 16, 2020

“Is our work different than any other Canadian business?”

According to Dan Sutton, there is a lack of willingness on the part of the BDC to serve the sector, which could have a dramatic impact on small businesses. “By protecting the health and safety of our employees, cannabis companies may face quarantine-related operational shutdowns, leading to crop failures,” he told the Cannabis Business Times. “Small businesses depend on the sale of cannabis as it is harvested, and an interruption of this cash flow jeopardizes the continuity of the operation. With millions of dollars locked up in biological assets currently in cultivation, companies like Tantalus Labs are hoping that the Canadian government will appreciate the cannabis sector's contribution to the economy and can help us so we don't have to choose between employee safety or protecting their jobs,” said Sutton.

The CEO of help, Hugo Alves also expressed his displeasure with this measure by the BDC, when questioning why a federal agency refused to work with a sector created specifically by the federal government.

the position of @bdc_ca on cannabis is absolutely baffling. They are a crown corporation, owned by the federal government, but they refuse to do business with an industry specifically created by the federal government?!? ?? how? Why? https://t.co/cmwIVcu24p

— Hugo Alves (@HugoAlves1972) March 17, 2020

An EDC spokesperson told the Yahoo Finance Canada which is analyzing the problem in more detail, as the types of companies eligible to access the program are still unknown. Whatever the case, Canada's cannabis sector is certainly feeling the strain of COVID-19. Canopy Growth, for example, announced which will temporarily close all 23 of the company's corporate retail locations. Tokyo Smoke & Tweed in response to the Coronavirus outbreak.

Loans through agricultural fund

O Farm Credit Canada (FCC), a government agricultural lender, says its entire suite of loan products is available to legal cannabis growers across the country, ensuring companies have access to the capital they need to overcome any short-term cash flow challenges.

While loan products are not tied to the COVID-19 pandemic, any liquidity offered by the FCC could be useful to cannabis companies feeling the widespread economic and financial fallout from the pandemic.
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