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Juneau cannabis dispensary found to be ineligible for $33,000 COVID-19 grant it already received

Rainforest Farms Cafe in downtown Juneau. (09/10/2020).
Rainforest Farms Cafe in downtown Juneau. (09/10/2020).(KTUU)
Published: Sep. 14, 2020 at 4:33 PM AKDT
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JUNEAU, Alaska (KTUU) - A Juneau cannabis dispensary is ineligible for a $33,000 grant it received from the City and Borough of Juneau to combat the economic impacts of COVID-19.

Jeff Rogers, the Juneau finance director, said that Rainforest Farms should not have received the grant that was paid from the city’s federal CARES Act funds. While the strictly regulated sale of cannabis is legal at a state and municipal level in Juneau, it remains illegal at a federal level.

A memorandum sent last Thursday to the Juneau Economic Development Corp. said that the city had asked the state for guidance on the grant and was told that “marijuana businesses are broadly ineligible for federal assistance.”

The state coronavirus grants program explicitly states that marijuana businesses cannot apply for financial help; Juneau’s $3.5 million grants program says they can.

Rogers said that allowing Juneau marijuana businesses to receive coronavirus grants was an oversight.

“I think it’s safe to say that the grant was made in error,” he added, explaining that new guidance would be issued by JEDC to ensure other marijuana businesses do not apply for grants.

Rainforest Farms will now need to pay back the $33,000 grant or turn it into a loan as part of a separate small business coronavirus program that is paid out of city coffers. A letter sent to the dispensary’s owners states that a decision on what to do with the money must be made by Sept. 30.

Rainforest Farms is the only Juneau cannabis business to have applied for a grant through the city’s small business program.

“We didn’t do anything wrong. We didn’t claim we weren’t a marijuana business, we were very open about that,” said Giono Barrett, a co-owner of Rainforest Farms. “We should not have to repay that, we are going to fight that.”

Barrett has also applied for another $66,000 grant from the city as part of a second phase of the grants program. That application was denied on Thursday with city officials citing the new guidance on grant eligibility.

Rogers said that there was no appeals process to the new guidance issued by the City and Borough of Juneau or the requirement for Rainforest Farms to pay the grant back or turn it into a loan.

With both grants, Rainforest Farms would have received the maximum allowable amount under the city’s small business program.

Barrett said the first grant had made a big difference in paying for operating costs as the dispensary had chosen to stay open during the pandemic. He estimated that the business was down roughly $700,000 in sales over the summer.

“We might be closed had it not been for that grant,” Barrett said.

The Juneau Assembly could appropriate its own funds to pay Rainforest Farms for the amount of the grant it received.

“I think it will be complicated for them to do that," Rogers said, explaining that assembly members may struggle with the idea of paying a cannabis dispensary with city funds. "I certainly appreciate the argument that a marijuana business is operating legally right alongside a cafe, or a bakery or a restaurant, and that they are disadvantaged by federal law in this particular case.”

James Barrett, another co-owner of Rainforest Farms and brother of Giono, said he would write a letter to the Juneau Assembly arguing the dispensary’s case. He said he would also talk to city officials about what should happen next but it was early days on what the dispensary owners wanted to do.

Barrett said that the $33,000 had already been allocated for higher staff wages and other basic business virus-related costs.

Glenn Hoskinson, a spokesperson for the Department of Commerce, Community and Economic Development, said the state is not vetting nor is it providing approval or non-approval for community expenses of CARES Act funds. The state also did not put any restrictions on how communities use the federal money.

Instead, communities follow guidance from the U.S. Treasury Department on allowable uses of the federal funds, Hoskinson said by email. She explained that Juneau city attorneys had come to their own independent conclusions on what should happen to the grant received by Rainforest Farms after receiving some advice from the state.

To Hoskinson’s knowledge, this is the first inquiry the state has got from a local government regarding marijuana businesses receiving CARES Act funds.

Copyright 2020 KTUU. All rights reserved.

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