Cannabis Businesses Affected by Flooding in Vermont Don’t Qualify for Federal Aid

Due to the federal status of cannabis, business owners in Vermont can’t acquire assistance from the federal government after intense floods in Vermont last week.
Vermont
Montpelier, Vermont, USA – July 13 2023: Flash flood cleanup and damage / Shutterstock

While the west coast braces for the annual summertime heatwave, states on the east coast are trying to stay afloat amidst heavy rain. Destructive flooding ran through Monteplier, Vermont, the state’s capital, leaving many businesses closed for cleanup and repair. For affected cannabis businesses, this means that they can’t apply for federal aid.

According to VTdigger.com, Lauren Andrews, the owner of Capital Cannabis on Main Street, spent many days last week cleaning up her dispensary with the intention of reopening on July 17. However, upon returning to her business she found a water leak that left the walls and floors soaked through. “We’re going to have to gut the place and start from scratch,” Andrews told the news outlet.

Also on July 17, cannabis business owners received word that they aren’t eligible for federal disaster aid. Instead, those funds are being driven toward other businesses who were impacted by last week’s historic floods.

“Because we are a federal agency, we have to follow federal law,” said Small Business administration public information officer, Carl Dombek. “Cannabis is not legal under federal law, and therefore we are not able to lend to cannabis dispensaries.”

VTdigger.com also noted that a cannabis business that has also received any FEMA Small Business Program assistance is disqualified from aid. Although Vermont Gov. Phil Scott asked the U.S. Department of Agriculture disaster declaration, it still would not allow affected cannabis farmers to receive federal crop insurance, according to a USDA Farm Service Agency executive director.

However, if cannabis industry employees lose their jobs because of the floods, they can still apply for unemployment since it’s a state provided service, and not a federal program.

The floods aren’t threatening to shut down cannabis businesses across the entire state but according to Cannabis Control Board chair, James Pepper, they’re still in need of help. “All these businesses live on a knife’s edge already because of the closed loop system,” said Pepper. “There’s no outlet. There is no pressure-release valve in the cannabis industry. And so … when something bad like this happens, it can ripple through the entire industry.”

“It’s a very interdependent relationship,” said Andrews. “When one of us goes down, it hurts everyone.”

Unlike other agricultural products grown in Vermont, cannabis growers are still learning how to assess damage in the wake of destruction. “We don’t consider cannabis an agricultural product, but it’s a seed and it’s a crop that grows in the ground,” Pepper added. “So we can use some of the best practices from the Agency of Agriculture to help deal with this issue in cannabis.”

Cannabis growing farms will need to test for wastewater contamination, and will have to keep an eye on their crops for water-related issues such as bud rot.

Vermont Growers Association co-founder and executive director, Geoffrey Pizzutillo has been working to distribute assessment forms for cannabis businesses to understand what kind of damage was experienced across the state. “It’s too early to tell,” Pizzutillo said. “But we want to drive home that it is the entire supply chain. Every license type is being impacted—not just the outdoor farmers, but retailers and manufacturers as well.”

U.S. Secretary of Transportation Pete Buttigieg visited Vermont once the floods subsided, likening the scene to the devastation left in the wake of Hurricane Irene in 2011. “You see just how urgent it is to make sure these communities get the help that they need,” Buttigieg said as he visited members of the community. “…Our message is to communities big and small: The federal government is here to help provide resources that are needed.”

While Vermont cannabis businesses won’t be benefitting from federal aid, Pizzutillo and others are hoping to prepare an accurate depiction of the damage so that businesses can at least qualify for emergency state funding—something that can be approved in a special legislative session. “I think the best thing that we can do at the Cannabis Board is collect the data and present it to the Legislature,” said Pepper. “And then we’ll see if there is a political will to help the businesses that are very severely hurt by this.”

Vermont’s recreational cannabis law was signed by Gov. Scott in October 2020, but sales didn’t begin until two years later. The state collected $2.6 million in just three months after recreational cannabis sales launched, and hit $24 million by May 2023.

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