Canadian cannabis firms of all sizes could be eligible for a three-month emergency wage subsidy program during the COVID-19 pandemic, welcome news for businesses that may be struggling financially.
The Canada Emergency Wage Subsidy program could help the Canadian cannabis industry and other employers keep workers on payroll during the crisis or give them the ability to rehire staffers who have already been laid off.
Still, critical details about eligibility requirements for the upcoming federal program remain murky.
The program for private-sector employers will:
- Subsidize 75% of an employee’s wages up to 847 Canadian dollars ($595) a week.
- Cover a 12-week period from March 15 to June 6.
- Make wage subsidies available within six weeks, or mid-May.
And Prime Minister Justin Trudeau said he will reconvene Parliament to pass legislation needed to enact the new wage subsidy program and other measures in response to COVID-19.
The program will be administered through a yet-to-be-released online portal being developed by Canada’s federal taxation agency. That portal is expected to be complete within three to six weeks, the government said.
Companies that sign up for the wage subsidy program will be strongly encouraged – but not explicitly required – to pay the remaining 25% of their employees’ salaries, Finance Minister Bill Morneau said during a Wednesday news conference.
“We’re asking businesses, if they can, to pay that extra 25%,” he said. “We’re recognizing that not every business will be able to do that.”
Eligibility for the wage subsidy program will depend upon a company experiencing a 30% decline in gross revenue during March, April or May versus the same months in 2019, before the COVID-19 crisis.
At first glance, that might exclude some companies in Canada’s nascent regulated cannabis industry who might have had little or no revenue a year ago. However, the finance minister said the federal government is looking for ways to adjust that requirement for newer firms such as startups.
“One way would be that they show us the previous month’s revenue and show the decline that happened,” Morneau said.
“We will have details on that situation and other situations in the coming days, in the near term.”
In a technical briefing for reporters, a senior government official said Canada recognized the need for flexibility in measuring revenue losses.
In cases where it’s impossible for a firm to make a meaningful year-over-year revenue comparison, he said, the government will rely on firms’ self-assessment of their revenue losses from a date of their choosing.
However companies assess their revenue losses, the official said, “they will need to demonstrate at the end of the day that whatever point of comparison they use to demonstrate their drop in revenues of 30% is reasonable.”
Canadian employers who don’t qualify for the Emergency Wage Subsidy program might still qualify for a previously announced wage subsidy program that covers 10% of salaries between March 18 and June 20.
Cannabis sector impact
At least some Canadian cannabis firms will take advantage of the wage program, predicted Rishi Malkani, who leads the cannabis practice at consultancy Deloitte Canada.
“Based on what we’ve seen, this is a wage subsidy that’s supposed to apply to businesses of all sizes,” he said. “Even before this, the cannabis companies were laying off a lot of their employees, so this is going to be welcome relief.”
While the cannabis sector awaits government clarification on the wage subsidy program’s eligibility criteria and application process, Malkani recommended companies prepare to apply.
“In terms of preparatory stuff, good hygiene would be making sure you can get your numbers together, start demonstrating your sales decrease,” he said.
“If you do fit into that circumstance where you weren’t around or something last year (and) you have to pick a different period, maybe start giving some thought to what period you’re going to pick.
“I suspect a lot of cannabis companies will need to avail themselves of that exception parameter.”
Solomon Israel is a reporter for Marijuana Business Daily, based in Winnipeg. He can be reached at [email protected]
For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.