Marijuana Business Magazine May-June 2020

Marijuana Business Magazine | May-June 2020 52 employee to utilize any available ben- efits (such as paid time off) or provide unpaid leave before they return to work. Alternatively, companies are permitted to ask employees to continue to appear for work. Additional state laws might also impact employers’ duties. What options are available to employers that need to reduce their workforce? The three primary options are layoffs, short-term unpaid leave because of lack of work (also known as “furlough”) and reducing employees’ hours and/or pay. Furloughed employees might be able to maintain certain benefits such as health insurance; however, receipt of paid-leave benefits might render an employee inel- igible for the expanded unemployment benefits included in the CARES Act. Are cannabis employers able to access financial relief through U.S. Small Business Administration (SBA) loans under the CARES Act or employer tax credits under the Families First Act? Cannabis companies that grow, produce, process, distribute or sell marijuana or marijuana products cannot access SBA loans made available under the CARES Act. Hemp and ancillary companies that do not violate federal law might be eligible. (At press time, the SBA’s $350 million paycheck protection program had run out of money. Federal lawmakers and the White House were in talks to provide more funding.) Both the CARES Act and the Families First Act provide favorable tax credits to employers, including a 50% refundable tax credit for wages paid to employees of businesses that have been closed because of a governmental order (capped at $5,000 per employee) and delay of payroll tax payments that could benefit the cannabis industry. However, it is unclear whether these tax credits are applicable to cannabis employers that are subject to section 280E of the Internal Revenue Code, which bars tax credits for businesses that traffic in controlled substances. Employers should consult with their CPA or tax counsel for further guidance. Joshua Kappel is a founding partner and Meg Nash is a senior associate attorney with Vicente Sederberg, a national cannabis law firm with offices in Boston, Denver, Jacksonville, Los Angeles and New York. Pandemic Pivot