can pot companies get PPP loans
can pot companies get PPP loans

Yes or No, Can Cannabis Companies Get PPP COVID-19 Loans?

Are marijuana companies eligible for PPP COVID-19 Loans or not?

Posted by:
Pace LaVia on Monday May 18, 2020

Are Marijuana Companies Eligible for PPP COVID-19 Relief Loans or No?

cannabis ppp loans

While the cannabis industry was busy shaming MassRoots for crowing about its PPP loan of $50,000, other cannabis companies were also quietly getting these funds. However, publicly traded companies can’t keep everything quiet and so it gets disclosed.  CFN Enterprises and Akerna both disclosed they have applied and received PPP loans.

CFN Enterprises (OTC:CNFN), home to CFN Media said that on May 6, it received $263,000 in a PPP loan, money that looks like it will mostly go towards paying its executives handsome salaries. 

CFN Enterprises

Like MassRoots, CFN gets most of its income from cannabis (plant-touching) companies who pay for sponsored content on the company’s website. Investors of these companies are treated to a steady diet of positive news stories with interviews from executives who never have to entertain difficult questions.

The company hasn’t reported earnings since September 2019 and is now delaying its latest financial filings and blaming COVID for the delay even though the pandemic did not start in earnest until March 2020.

The last 10Q from the company showed that it earned a respectable $568,992 in the quarter ending September 2019, but for the nine months ending September the revenues were $631,712. So most of the revenue came in that last quarter. However, expenses were $600,663 and the company reported a net loss of $415,330.

The company managed to sell its CAKE business which was a Software-as-a-Service platform providing online tracking and analytics solutions for advertisers and online marketers for $19 million. This money was used to pay off debt and acquire a sponsored content company called Emerging Growth LLC. CFN paid $420,000 in cash and stock valued at $2.7 million. CFN also said it was a going concern because it reported a net loss for those past nine months of $1.2 million.

There also seems to be some question as to who the President of the company is. CEO Brian Ross signs all of the SEC filings as CEO and President, yet there is an employment agreement with Frank Lane to be the President of CFN Media for which he is paid a very generous salary of $230,000 a year. This employment contract was signed in June 2019 and it seems as if Lane is still an employee and President earning this handsome salary at the same time the company has let many of its contributors go. Brian Ross was last reported in 2018 as making a salary of $312,159 year.

So, if nothing has changed here, these two executives command almost more pay than the company’s nine months of revenue. Counsel’s Damon Stein’s pay was $312,159 (2018) but he resigned in December 2019.

CFN also looks like it is trying to establish a CBD e-commerce business as it signed an agreement with BlockCerts Blockchain company and is paying that bill in stock. Although the company did state in its last SEC filing that since COVID has impacted markets, the company could be negatively affected.

It looks like it has bought time with the PPP loan and luckily can now pay these expensive executives their salaries. 


Akerna (NASDAQ: KERN), the parent company of MJ FREEWAY, received $2.2million in PPP loans from the US government as first reported by Alan Brochstein at New Cannabis Ventures here.  Akerna did receive their loan before the April 23 guidance was issued around whether marijuana companies are eligible for PPP and other loan programs created during the COVID-19 pandemic.  It appears that most legal opinions at this time say that cannabis companies are not eligible for the loans at the Federal level as they derive their revenues from plant-touching marijuana companies.  As Alan points out in his article:

MassRoots also received a PPP loan that was disclosed in its SEC filings, which created an uproar, as companies that derive revenue from the cannabis industry may be prohibited from accessing SBA loans. Cannabis-focused law firm Vicente, Sederberg stated, “While SBA has not formally addressed the eligibility of marijuana businesses for the broader Paycheck Protection Program, it appears prior SBA regulation and policy guidance may prohibit access to this program by marijuana businesses and certain other types of businesses.”

The underlying question that may decide the fate of these loans and whether they will face Federal repercussions is what is a “marijuana company”?  Right now, it is defined as revenue derived from cannabis-touching companies, a big no-no right now according to the SBA guidelines. What if a company like Massroots gets 3% of their revenue from cannabis-based companies, and 97% their revenue from Amazon affiliate links for ancillary products like bongs and pipes?  If a software company does coding for a variety of companies, but cannabis-based companies are 5% of their contract revenue, are they eligible for a PPP loan for an employment staff of 20?

The Federal government will eventual decide who is and isn’t eligible for a loan, either by an act of omission or commission by reviewing the subject.  Stay tuned as more cannabis companies have to report their financials and we may see more PPP loans on the books.  The good news right now is that Treasury Secretary Steve Munchin said most companies receiving PPP loans should not worry about possible fraud investigations. The bad news is Mitch McConnell seems very angry that the word “cannabis” appears 68 times in the new Democratic proposed COVID-19 relief package, and he may seek retribution against the whole “cannabis” subject as a rebuke to Democrats, which could be done in the form of going after cannabis companies who may have illegally gotten PPP loans.







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