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To all our clients and business partners, below is a link to PDF prepared by the U.S. Chamber of Commerce regarding The Coronavirus Aid, Relief, and Economic Security (CARES) Act.
It provides information on emergency loans for small businesses, eligibility requirements, borrowing parameters, and how to engage.
Here is additional information on the CARES Act and the Paycheck Protection Program (PPP) from the Victor Chamber of Commerce and Canandaigua National Bank:
Paycheck Protection Program (PPP)
What is it?
Eligible business and not-for-profits will be able to borrow up to 2.5 times their average monthly payroll costs calculated using the 1 year period before the loan is made but excluding payroll amounts over $100,000 for employees making more than $100,000. Plus, any outstanding amounts of any Emergency Injury Disaster Loans (EIDL) that were obtained on or after January 31, 2020. Those EIDL loans are eligible to be refinanced under the PPP. Up to a maximum loan amount of $10,000,000.
What is the application period?
Now through June 30, 2020
Who is eligible?
Businesses, not-for-profit organizations, self employed individuals, sole proprietors & independent contractors that meet U.S. SBA size standards as follows:
The greater of –
+ Where applicable, the SBA size standard for employees within the industry that the borrower operates by NAICS code; or
+ The lender must also consider:
+ Whether the applicant was in operation as of February 15, 2020; and
+ Had employees for whom they paid salaries and payroll taxes or paid compensation to independent contractors
Who can make these loans?
Lenders who have delegated authority from the SBA. Canandaigua National Bank & Trust Company will be making these loans.
What can I use the loan for?
Eligible use of proceeds includes:
+ Employee salaries, commissions or other similar compensation as well as other payroll costs.
+ Costs related to the continuation od group health care benefits
+ Payments of interest on any mortgage obligation (cannot be used for prepayment penalties or principle payments on a mortgage)
+ Interest on any other debt obligation where the debt obligation was incurred prior to the covered period
Other loan features:
+ No collateral requirement
+ No personal guarantees required
+ No fees
+ Automatic payment deferral for 6 to 12 months
+ No prepayment penalty
+ The is a debt forgiveness provision
Tell me more about the debt forgiveness provision!
Borrowers will be eligible for debt forgiveness on these loans in an amount equal to loan proceeds that were used to pay:
+ Payroll costs
+ Any payment of interest on a covered mortgage obligation
+ Any payment of rent made under a lease obligation that was in place before February 15, 2020
+ Utility payments for electricity, gas, water, telephone, or internet access as long as the service began before February 15, 2020
+ Made during the 8 week period at the time of loan origination. Additional documentation will need be provided to the lender to document debt forgiveness.
+ Borrowers will need to certify the following:
+ That the uncertain of current economic conditions makes necessary the loan request to support the ongoing business operations of the business.
+ Acknowledging that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments.
+ That the eligible recipient does not have an application pending for a loan under this program for the same purpose and duplicative of the amounts applied for or received under a covered loan; and
+ During the period beginning February 15, 2020 and ending on December 31, 2020, that the eligible recipient has not received amounts under this program for the same purpose
Small Business Provisions
- Paycheck Protection: Forgiveness For Small Business Loans for Keeping Employees: Through the SBA’s existing 7(a) loan program, the bill creates a “paycheck protection program” for small employers, self-employed individuals, and “gig economy” workers, with $350 billion to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic. The “Paycheck Protection Program” would provide 8 weeks of cash-flow assistance through 100% federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven. This proposal would be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.
- Flexibility with Disaster Loans: Businesses that have already taken advantage of the SBA’s Economic Injury Disaster Loans will have the opportunity to “re-finance” those loans into the “paycheck protection program”.
- Debt Relief: For six months, SBA is required to pay all principal, interest and fees on all existing SBA loan products including 7(a), Community Advantage, 504, and Microloan programs for six months.
- Money for American families. A one-time check of $1,200 per individual and $500 per child for those with a valid SSN. There are no earned income or tax liability requirements to receive these rebate checks. The full rebate amount is available for those with incomes at or below $75,000 for individuals, $112,500 for head of household, and $150,000 for married couples. The rebate amount phases out after those income levels.
- Loosens Rules on Retirement Accounts. A temporary pause for 2020 on the mandatory minimum distributions from retirement accounts allowing capital to stay invested instead of being forced to cash out. The bill also waives the 10% penalty on coronavirus-related early distributions from 401(k)s and IRAs, which applies to distributions up to $100,000 made at any time during 2020.
- Employee Retention Tax Credit: Employers that face closure orders or suffer economic hardship due to the coronavirus crisis that continue to pay employees that are furloughed may be eligible for a 50% credit on up to $10,000 of wages paid to those employees.
- Delays Payroll Tax Payments for Employers: Employers would be able to delay the payment of their 2020 payroll taxes until 2021 and 2022, leading to approximately $300 billion of extra cash flow for businesses.
- Restores Supports for Businesses Suffering Losses: The bill also allows businesses to carry back losses from 2018, 2019, and 2020 to the previous 5 years, which will allow businesses access to immediate tax refunds.
- Encourages Businesses to Invest in Improvements: The bill would fix cost recovery for investments in Qualified Improvement Properties, which will allow businesses that made these investments in 2018 and 2019 and receive tax refunds now.
- Expanded Unemployment Benefits: Temporarily expands unemployment benefits to cover the self-employed, independent contractors, gig workers, etc. during the public health emergency. The bill also includes support to state and local governments and nonprofits so they can pay unemployment to their employees.
- More Money for a Longer Period for More Workers: Adds a $600/week across-the-board payment increase through the end of July. In addition, for those who need it, the bill provides an additional 13 weeks of benefits beyond what states typically allow.
Coronavirus Relief Fund
- Additional State Emergency Funding: $150 billion to States, Territories, and Tribal governments to use for expenditures incurred due to the public health emergency with respect to COVID-19 in the face of revenue declines, allocated by population proportions.
Additional Emergency Relief
- $425 billion for loans, loan guarantees, and investments in support of lending facilities established by the Federal Reserve for the purpose of providing liquidity to businesses, states, or municipalities through purchasing obligations or other interests directly from issuers of such obligations or other interests.
- The bill cuts red tape to ensure that banks have room to provide the resources businesses need.
Additional Funding of Existing Programs
- The Rural Business Cooperative Service is receiving an additional $20.5 million to facilitate making $1 billion in lending authority available for the Business and Industry loan guarantee program, which provides financing to business owners that might not be able to qualify for a loan on their own.
- The Reconnect Pilot is receiving $100 million to provides grants for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide broadband service in eligible rural areas.
- The Community Development Block Grant (CDBG) receives $5 billion to provide communities and states with funding to provide a wide range of resources to address COVID-19, such as services for senior citizens, the homeless, and public health services. Funding will be distributed using the CDBG formula.
- The Dislocated Worker National Reserve is receiving $345 million to help states and communities to respond to the workforce impacts and layoffs resulting from the coronavirus.
- State and Local Preparedness Grants receive $1.5 billion in designated funding for state and local preparedness and response activities. When combined with the first supplemental, Congress has provided $2.5 billion for state and local needs.
- The Child Care and Development Block Grant receives $3.5 billion in grants to states for immediate assistance to child care providers to prevent them from going out of business and to otherwise support child care for families, including for healthcare workers, first responders, and others playing critical roles during this crisis.
- The Community Services Block Grant program receives $1 billion in direct funding to local community-based organizations to provide a wide-range of social services and emergency assistance for those who need it most.
- TheSupplemental Nutrition Assistance Program (SNAP) receives $15.51 billion to provide additional funding for SNAP to cover waiver authorities granted in H.R. 6201 and anticipated increases in participation as a result of coronavirus.
- TheEmergency Food Assistance Program receives $450 million to provide additional funding for commodities and distribution of emergency food assistance through community partners, including food banks.
- Veteran Affairs receives $14.4 billion to supportincreased demand for healthcare services at VA facilities and through telehealth, including the purchase of medical equipment and supplies, testing kits, and personal protective equipment. Also enables VA to provide additional support for vulnerable veterans, including through programs to assist homeless or at-risk of becoming homeless veterans, as well as within VA-run nursing homes and community living centers.
Specific Health Appropriations
- $100 billion to hospitals and other health care providers through a new program. The bill provides wide latitude to the Administration to determine program parameters. We believe HHS will hire a third-party claims processor, similar to a Medicare Administrative Contractor. This processor will use criteria, outlined by HHS, to determine (1) eligibility of provider, (2) justifiability of amount, (3) amount of claim, (4) payment, and any other information determined by HHS. We also assume there will be an administrative appeals process. We do not know specifics yet as this is a new program.
- $16 billion to the Strategic National Stockpile to procure personal protective equipment, ventilators, and other medical supplies for federal and state response efforts
- $11 billion to support research and development of vaccines, therapeutics, and diagnostics to prevent or treat the effects of coronavirus.
- $4.3 billion to the CDC to support federal, state, and local public health agencies to prevent, prepare for, and respond to the coronavirus
- $185 million through HRSA to support rural critical access hospitals, rural tribal health and telehealth programs
- $200 million for CMS for priorities like assisting nursing homes with infection control and support states’ efforts to prevent the spread of coronavirus in nursing homes
- $1.32 billion in supplemental funding to community health centers on the front lines of testing and treating patients for COVID-19.
- $340 million for rural broadband and telehealth infrastructure, as well as telemedicine initiatives.
U.S. Small Business Administration: New York Businesses Declared Eligible to Apply for Economic Injury Disaster Loans
SBA: Disaster Loan Assistance
Internal Revenue Service: Coronavirus Tax Relief
New York State Department of Labor: Shared Work Program Partial Unemployment Insurance Benefits
Federal Business Resources
U.S. Small Business Administration: Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19)
SBA: New York Businesses Declared Eligible to Apply for Economic Injury Disaster Loans
SBA: Disaster Loan Assistance
Internal Revenue Service: Coronavirus Tax Relief
FEMA: Coronavirus (COVID-19) Pandemic: Eligible Emergency Protective Measures
OSHA Coronavirus Page
U.S. Department of Labor: Public Health Emergencies and the Fair Labor Standards Act Questions and Answers
U.S. Equal Employment Opportunity Commission: What You Should Know About the ADA, the Rehabilitation Act, and COVID-19
Federal Health Resources
Centers for Disease Control Coronavirus Resource Page
CDC: Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19)
CDC: Coronavirus Frequently Asked Questions CDC: Coronavirus Handouts and Posters
CDC: Environmental Cleaning and Disinfection Recommendations
CDC: Coronavirus Prevention and Treatment
CDC: Personal Nonpharmaceutical Interventions: Everyday Preventive Actions
Department of Homeland Security Pandemic Guidance
World Health Organization Coronavirus Resources
State Business Resources
Assemblyman Brian Kolb: https://www.friendsofbriankolb.com/sound_response_to_coronavirus_requires_emergency_aid_for_small_businesses_and_their_employees
Empire State Development: Guidance for Determining Whether a Business Enterprise is Subject to a 100% Workforce Reduction
Empire State Development: Request for Designation as an Essential Business
Empire State Development: COVID-19 Resources
Empire State Development: Submit Your COVID-19-Related Questions
New York State Department of Labor: Shared Work Program Partial Unemployment Insurance Benefits
New York State on PAUSE
Executive Order: Reduction of On-site Workforce at New York State Businesses and Nonprofits
Executive Order: Health Care, Malls, and Amusement-related Businesses
Paid Leave for New Yorkers Under Mandatory or Precautionary Quarantine Due to COVID-19
Town of Victor: https://www.victorny.org/404/Town-of-Victor-COVID-19
Ontario County Health Dept: https://www.co.ontario.ny.us/101/Public-Health
Monroe County Health Dept: https://www.monroecounty.gov/
Academic Institutions and Health Care Providers
UR Medicine/Thompson Health: https://www.thompsonhealth.com/
Victor Health Associates: http://www.victorhealthassociates.com/
Rochester Regional Health: Coronavirus Disease 2019 (COVID-19)
University of Rochester: Novel Coronavirus Resources and Updates
Ability Partners/Happiness House: https://www.happinesshouse.org/
Planning and Preparation (benefits, financial, consulting)
Google: Resources to Help Your Small Business Manage Through Uncertainty
Relph Benefit Advisors: Coronavirus Resource Center
KPMG: COVID-19: How CEOs can respond to the crisis and build a resilient future
J.P. Morgan: Managing Through Uncertain TImes
Bond Benefits Consulting: Coronavirus Testing in New York and Other FAQs
Benefit News: Growing Concerns of Coronavirus Should Spur Plans, Not Panic, in the Workplace
Gallagher: Coronavirus (COVID-19) Pandemic Preparedness
McKinsey & Co.: COVID-19: Implications for Business
Socialgist: Remote Readiness: Managing Work from Home Video
CypherWorx Course: COVID-19: What You Need to Know
Canandaigua National Bank: https://www.cnbank.com/Your_Bank/News/Articles/2020/Message_from_CNB_Regarding_COVID-19/?utm_source=homepage&utm_medium=alert&utm_campaign=securityalert
Generations Bank: https://www.mygenbank.com/
Lyons National Bank: https://www.bankwithlnb.com/article/covid-19-update-regarding-branch-operations
Reliant Community Credit Union: https://www.reliantcu.com/covid-19-updates
Summit FCU: https://www.summitfcu.org/landing/covid19/
U.S. Chamber of Commerce: 5 Ways to Manage Small Business Coronavirus Concerns When Employees Can’t Work From Home
U.S. Chamber of Commerce: 5 Resources to Help Your Small Business Survive the Coronavirus
U.S. Chamber of Commerce: Coronavirus Workplace Tips for Employees
Complete Payroll: COVID-19 Resources for Employers
SHRM: Trump Signs Coronavirus Relief Bill with Paid Leave Mandate
HR Dive: Quick Tips for Employers as Coronavirus Outbreak Continues
ESL: Coronavirus: What Employers Need to Know
Alera Group: Congress Passes Families First Coronavirus Response Act
Public Relations and Communications
PRSA: Crisis Communications Resources
Dixon Schwabl: Coronavirus Communication Tips
PR Daily: How Brand Managers Should Address Coronavirus
PR Daily: Why Cooler Heads Must Prevail on the COVID-19 Virus
Mower: Five Communications and Operational Tips for Companies to Prepare for the Coronavirus
Visit Rochester: Travel, Tourism, and Hospitality Industry Resources
imPowr Community Needs Exchange Matchmaking Portal
United Way and Rochester Area Community Foundation Community Crisis Fund
United Way Volunteer and In-kind Donations Response for COVID-19
Child Care Council Offers Assistance to Families Seeking Services
Rochester Area Community Foundation: COVID-19 Resources
- Rochester First: NY law for tenant protections, slumlord crackdown getting pushback
- Spectrum News: Housing Stability & Tenant Protection Act – Landlords are unhappy about new rights for tenants passed in June 2019
- New York Law Journal: Attorneys Aim to Ease Small Landlords’ Crunch Linked to NY’s New Rent Laws *requires paid subscription to read full article*
- Capitol Pressroom Interview: Landlords push for new rent law changes
ROCHESTER BUSINESS JOURNAL ARTICLE BY JASON W. KLIMEK: CANNABIS LEGALIZATION WOULD HAVE MAJOR EFFECTS ON LOCAL BUSINESSES
A new year is upon us and with that, a renewed effort to legalize cannabis in New York. Before diving into what legalization means for New York, let’s take a minute to recap the cannabis highlights of 2019.
In January 2019, Gov. Andrew Cuomo announced that he wanted to include cannabis legalization in the 2019 budget. The legislature had a cannabis bill sitting in the Senate Finance Committee called the Marijuana Regulation and Taxation Act. The MRTA was drafted by Assembly Majority Leader Crystal Peoples-Stokes, D-Buffalo, and Senate Finance Committee Chairwoman Liz Krueger, D-Manhattan. The governor offered his proposal called the Cannabis Regulation and Taxation Act, or CRTA. While the bills had some similarities, ultimately the differences proved too much to be included in the 2019 budget bill. The major sticking points were over where tax revenue generated by cannabis sales was to be spent and whether just counties and cities with over 100,000 residents could opt out of sales of recreational cannabis or if it would be left to local municipalities to decide whether to opt out.
After MRTA’s failure to be included in the budget, the legislature attempted to pass it at the end of the 2019 legislative session. Again, the same sticking points came up and the bill did not get a vote.
However, New York passed two cannabis related bills last June. The first, immediately signed into law by Cuomo, was cannabis decriminalization 2.0. New York first decriminalized cannabis in 1977 but there were unintended consequences insofar as penalties disproportionately impacted certain communities. That was remedied by the 2019 decriminalization bill. However, it’s important to note this was not legalization. Decriminalization, in short, makes the personal possession (under two ounces), a violation, as opposed to a criminal charge.
The second bill, just recently signed into law by the governor and supported by the New York Cannabis Growers and Processors Association, was a hemp extract bill, which creates a strong statutory and regulatory framework around hemp and CBD production and sales. This bill provides, perhaps, a first glimpse of how New York might create cannabis market regulation. The hemp extract bill may be a proxy in terms of how legalization of recreational cannabis could impact local businesses.
Prior to the passage of the hemp extract bill, the statutes and regulations regarding hemp were very limited, unclear and left mostly to unofficial “rules” issued by the Department of Agriculture and Markets. Suffice to say, this left many in the hemp industry scratching their heads as to what is legal, what isn’t and what happens if you violate the law. As it turns out, the answers to the questions were, “no one is 100 percent sure” and “not much.”
What was clear under the previous hemp law and regulations, as well as the new hemp extract bill, is that CBD is a supplement (and with that comes complications from the FDA, but we’ll leave that to another article) and cannot be an ingredient in food, as well as the fact that hemp flower possession is illegal unless the possessor has a hemp cultivation or processing license. However, as stated above, violations of the law were met with little, if any, enforcement action.
As I’m sure you’ve noticed, CBD shops have popped up everywhere. However, CBD, prior to the hemp extract bill, was virtually unregulated. To demonstrate this point, a government official relayed the following story: The official walked into a store and on display were “CBD Lollypops.” The official stated that it was illegal to sell CBD in food items. The store owner stated that it wasn’t an issue because the lollypop did not actually contain CBD, he just wrote CBD on the sign and charged $5 more. Without regulation, that’s not unlawful (unless we get into more complicated topics like consumer fraud and related laws).
The passage of the hemp extract bill promises actual regulation while protecting legitimate hemp and CBD businesses. New York is likely to require some of the strictest regulation in the country as it concerns quality and contaminants in hemp and CBD. This is designed to help New York State businesses by making it unlawful to import and sell cheap, low quality hemp to undercut the New York market. The increased requirements were a replacement for a provision that required all CBD to be manufactured using New York sourced hemp. That provision was likely unconstitutional because it could be viewed as violating the Commerce Clause of the U.S. Constitution since hemp is now federally legal, thanks to the Agricultural Improvement Act of 2018.
We can (and should) expect a cannabis legalization bill to have these same types of protections. However, New York can go further than the hemp extract bill in terms of its protection and support of local businesses. Unlike hemp, cannabis is federally illegal and therefore worries of violating the Commerce Clause are absent. Given that interstate transport of cannabis is illegal, all recreational cannabis in New York will be grown, processed and sold wholly within New York, which will be a boon for local businesses.
A legalization bill will include licensing for any business that touches the plant (growers, processors, distributors, retailers, labs, etc.). Assuming no radical changes to the bill, there will also be restrictions on vertical integration, e.g., if you own a cannabis grow facility, you cannot have a direct or indirect interest in a dispensary. Having an indirect interest can even extend to being the landlord to a dispensary. This provision is designed to support small businesses by preventing massive out of state companies setting up fully vertically integrated businesses and undercutting the market by using their economies of scale to drive small companies out of business.
It’s important to understand, however, that the business opportunities in cannabis aren’t just reserved for those who touch the plant. An equally large, if not larger, market is for ancillary cannabis businesses. Professionals who specialize in cannabis such as those who have experience in cannabis law, accounting, sales, marketing, supply chain management, tracking and tracing products, agricultural machinery and processes, etc. are currently, and may be even more so, in demand.
In its April 2019 report, the Rockefeller Institute of Government estimated that New York’s potential $1.7 billion cannabis market “could generate a total economic output of $4.1 billion and total employment of 30,700.” The report also looked at the impact of municipalities opting out of sales of cannabis. Those municipalities that opt out would forgo the proposed 4 percent local tax revenue currently in the draft legislation. This could make various municipalities winners and losers in the cannabis economy, as we’ve seen in many other states.
Speaking of taxes, I would be remiss, as a tax attorney, to fail to acknowledge the ludicrous taxes proposed on cannabis in New York. New York, in an apparent attempt to retain its high tax reputation and outdo every other state in the nation, proposed a $0.25 tax per dry weight gram of trim and $1 tax per dry weight gram of flower, plus an 18 percent state tax, plus a 4 percent local tax. When you look at the impact on small businesses and how the excise taxes would work, it ends up resulting in an approximate 66 percent excise rate. That doesn’t include both New York and federal income taxes, which, on the federal side, thanks to Section 280E of the tax code that prohibits deductions for all business expenses except cost of goods sold, can result in tax rates in excess of 90 percent. As we’ve seen in California, excessively high tax rates result in the consolidation of the industry to the largest players, while local companies go out of business, unable to compete against behemoths of the industry who have had a decade head start.
For those who are in the cannabis economy or are interested in it and want to see New York lead the country, two of the most fundamental aspects are proper taxation and regulation. It is incumbent upon those who seek to be part of the cannabis economy to speak with their state Assembly and Senate members and educate them on how taxation and regulation, when done properly, can support local businesses, but if not carefully analyzed and implemented, can destroy the very economy the state hopes to create.
Jason Klimek is the chair of the Cannabis Practice Group at Boylan Code LLP and a member of the New York State Bar Association’s Committee on Cannabis Law and candidate for the New York State Senate’s 59th District. He has worked with New York legislators, providing analyses regarding taxation and licensing. He focuses his practice on cannabis companies as well as startup and small to midsized technology companies.
Jason W. Klimek, Esq. and his client Zack Sarkis, Executive Director of HempLab NY were on Fox Rochester promoting the December 7th Hemp Lab NY conference at the University of Rochester, as well as the changes that have been happening in the industrial hemp and cannabis industry in NYS this past year.
- Click here to watch the Fox Rochester interview
Click here to learn more about Hemp Lab NY
Click here to learn more about Boylan Code’s Cannabis Law practice group
Stay tuned for future hemp and cannabis industry events in 2020!
Jason W. Klimek, Esq. spoke at a press conference in Genesee County with New York State Senator Chuck Schumer and Brad Mills, owner of Mills Family Farms on Tuesday, October 1, 2019.
The purpose? To bring attention to the emerging industrial hemp industry in Upstate New York, and the lack of access these hemp farmers, suppliers and retailers have to traditional financial services, that will help fund and support their growing businesses.
To read more about what the 2018 Farm Bill did and what Schumer’s message was at the press conference, as well as next steps, please visit the links below for more information:
- Press release from Chuck Schumer and his team
- News article from Wham13 News
- Video coverage from The Batavian