Pandemic rent subsidy misses some cannabis retailers, Canadian business group warns

A new federal program to lower rent by 75% for small businesses impacted by COVID-19 might not be helpful for some cannabis retail entrepreneurs, the Canadian Chamber of Commerce warned today.

The program provides forgivable loans to cover 50% of monthly rent payments for the April-June period. Landlords will cover another 25% and tenants must cover the remainder.

To be eligible, small business tenants must:

  1. Pay less than 50,000 Canadian dollars ($35,000) per month in rent.
  2. Have temporarily ceased operations or experienced at least a 70% drop in pre-coronavirus revenues.

That eligibility criteria might exclude cannabis stores that had been gearing up to launch their operations in recent weeks but have been unable to open their doors because of the pandemic – yet remain on the hook for rent payments.

“One of the biggest barriers will be if you haven’t opened up yet, because then obviously you haven’t ceased operations that haven’t begun, and you can’t have a decrease in revenue that didn’t exist,” said Ryan Greer, senior director and cannabis policy lead at the Canadian Chamber of Commerce.

“Our members have said, especially in Ontario, there are a bunch of dark sites where construction has been paused and openings are delayed – they’re paying rent and they should be eligible for these programs.”

Ontario’s emergency order to pause construction work because of the COVID-19 pandemic has delayed the opening of some new retail stores.

The Alcohol and Gaming Commission of Ontario – the provincial cannabis regulator – said this week it will resume issuing new Retail Store Authorizations (RSA) – but only for stores that completed construction in compliance with the emergency order.

The rent-subsidy gap could apply to dozens of stores in British Columbia, Ontario and Alberta.

The new program – first reported by The Globe and Mail – will be administered by the Canada Mortgage and Housing Corp.

New store openings is one of the main drivers of adult-use cannabis sales growth.

February’s sales dipped slightly to just under CA$150 million, the last full month of purchases before the COVID-19 crisis.

More information about the rent subsidy is available here.

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].

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