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Oregon Cannabis Farmers May be Eligible for 2021 Disaster Relief Assistance

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On May 9, applications opened for assistance under the Oregon Disaster Assistance Program (ODAP) and remain open until June 3, 2022. The state legislature established the program to support Oregon farmers, ranchers, and producers recovering from the historic levels of drought, record setting heat, wildfires and smoke, ice and winter storms, and other residual effects of natural disasters in 2021. Under state statute, marijuana is a crop for the purposes of farm use and is the product of an agricultural activity, so although the program doesn’t explicitly include cannabis, Oregon cannabis (marijuana) and hemp farmers who suffered economic losses in 2021 due to natural disasters may be eligible for disaster relief assistance under the program and should apply as soon as possible.

Program Design

The legislature structured the program as a forgivable state level loan to supplement federal disaster relief programs or act as a bridge loan until farmers receive certain USDA Farm Service Agency (FSA) disaster assistance. Banks and credit unions familiar with agriculture will administer assistance, and each lender has its own official application. Lenders accepting applications include Umpqua Bank, Columbia Bank, Bank of Eastern Oregon, and Old West Federal Credit Union.

Assistance will begin processing after the application deadline, and fund distribution will start approximately two weeks later. Applicants with the highest loss of income will be prioritized. Additionally, based on available funds, ODAP may conduct a second application round.

Program Qualifications

To qualify for funds, an individual must complete the ODAP Application with a participating lender. The application will demonstrate that the applicant has: 1) filed taxes in Oregon for farming or ranching operations located in the state or that the person is an Indian tribe as defined by ORS 391.802 with farming or ranching operations in the state; 2) an adjusted gross income of less than $500,000 in the calendar year 2021; and 3) farming or ranching operations in the state that suffered economic loss in 2021 due to a qualifying natural disaster. Qualifying natural disasters include drought, flood, heat wave, winter storm, wildfire, pest, infestation, or any other natural phenomenon specified by rule.

Payment Details

The program calculates assistance for eligible producers based on lost gross farm income and looks at tax filings from 2017, 2018, and 2019 to establish a three-year baseline of what the producer could have reasonably expected in farm income without disaster impacts. Using the producer’s 2021 gross farm income, the difference between 2021 income and the three-year baseline is considered loss due to natural disasters.

If a producer did not farm in 2017, 2018, or 2019, the 2020 farm income may be used as a substitute. If a producer did not farm in 2020 or did not farm in multiple years, the National Agricultural Static Service (NASS) data may be used to determine an income amount.

The maximum assistance is $125,000 or 90% of the three-year baseline. Producers who meet the USDA definition of a historically underserved producer or who have less than $350,000 in gross income may qualify for maximum assistance up to $150,000 or 95% of the three-year baseline. Historically underserved producers under 7 USC § 1470.3 include beginning producers, socially disadvantaged producers, limited resource producers, and veteran producers.

All applicants must provide proof of income and/or expenses by providing copies of applicable tax documents, or as an alternative, applicants may submit the ODAP independent income/expense verification form. The independent verification form is preferred, and if used, a producer does not have to provide copies of tax documents to the lender for the application.

Businesses that file an IRS Form Schedule F must provide copies of filed 2017, 2018, 2019, and 2021 forms. Copies of the producer’s 2020 Schedule F may be needed if 2020 income is used in the baseline determination. The lender may also require a copy of a signed 1040 of a complete tax return for the applicable year.

Businesses that file an IRS Form 1120 or 1120-S must provide these forms in place of the Schedule F. Only farming or ranching income should be shown.

Forgiveness Determination

If the applicant did not receive USDA Farm Service Agency (FSA) disaster assistance for losses in 2021, and actual gross farm income from a filed 2021 tax return has been used, the full balance of any loan granted will be forgiven immediately upon disbursing the loan.

If estimates for 2021 gross farm income were used, the applicant must give the lender a copy of the applicant’s 2021 tax return filed with the IRS. The loan will be recalculated using information from the filed tax returns, and if the adjusted calculation is lower than what was disbursed, the recipient will be required to repay the difference, with the remaining loan amount to be forgiven. Failure to provide a copy of the filed 2021 tax return to the lender on or before November 30, 2022 will result in the loan being unforgiven, and the recipient will be required to pay the loan back in full to the lender.

If the applicant is awarded FSA disaster assistance after submitting an ODAP application, the recipient must provide the lender a copy of the FSA award letter. The award amount will be added to the applicant’s 2021 income, and the loan will be recalculated based on the adjusted income. If the adjusted loan amount is more than $1,000 below the amount received, the recipient must pay the difference, and any remaining loan amount will be forgiven. Failure to provide a copy of the award letter within 90 days of receiving it will result in the loan balance being unforgiven, and the recipient will be required to pay the loan back in full to the lender.

Conclusion

Natural disasters significantly disrupted agricultural production in Oregon in 2021, and the ODAP loan program offers need-based assistance to help producers remain solvent and stable in the near term. Before applications close on June 3, Oregon cannabis and hemp farmers who meet the program’s qualifications and who suffered economic losses as a result of natural disasters in 2021 are strongly encouraged to submit ODAP applications for an opportunity to receive financial disaster relief assistance.

You can contact Allison Campbell at info@gl-lg.com or 503-488-5424.

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