Major cannabis tech firm MassRoots is approved for $50,000 federal stimulus check

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

Founded in 2013, MassRoots is one of the most well-established businesses in the cannabis space. However, it’s latest SEC filings indicate annual revenue below $1 million. To make matters worse, for the fiscal year 2018, MassRoots had a market cap of $833.5 and annual revenue of $19.60 k demonstrating a 93.9 percent year-over-year (YOY) decrease from the previous period.

These financial struggles put the cannabis company in a position whereby its future remained uncertain. Fortunately, there’s a silver lining for MassRoots, what with the cannabis technology company recently bagging a $50,000 loan as part of the U.S. government Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

With most cannabis companies being told that they are not eligible to receive funding, the federal loan came as a surprise to MassRoots. A $50,000 cash injection means that the company can now begin to rebuild on its past failures amid the coronavirus (COVID-19) pandemic that has left the U.S. and global economy in tatters.

Moreover, the fact that MassRoots is on the receiving end of a $50,000 stimulus check provides other cannabis companies with hope that they’ll also gain financial support at a time when they need it the most. The business loan, according to MassRoots CEO Isaac Dietrich, will be utilized to afford paychecks for five employees, as well as to fund rent and stock up on payroll for the foreseeable future.

Bank of America granted MassRoots federal funding amid COVID19

Headquartered in Denver, MassRoots is an online forum designed to facilitate communication and connections regarding specific topics in the cannabis space. In a victorious turn of events, a loan was secured by the company on May 3 from the Bank of America. This report initially came courtesy of Law360, which also noted how MassRoots revealed in 2019 that the cannabis company had less than $2,600 cash-in-hand revenue; this information was divulged to the Securities and Exchange Commission.

On April 24, to ensure the eligible people of America would be taken care of amid the economic backlash caused by COVID-19, the first round of the CARES federal funding package was distributed. However, cannabis business owners were told that they wouldn’t be able to get their hands on any of the funding; since the cannabis plant is a federally illegal substance. MassRoots’ CEO fought for a slice of the $2 trillion stimulus package that was distributed among small business owners, families and individuals; specifically, small business owners were offered an opportunity to apply for a $669-billion business loan program Paycheck Protection Program (PPP).

MassRoots got lucky and, if other businesses operating in the legal weed space are hoping to get a chunk of the CARES federal funding package, they ought to take note. Dietrich affirms that there is still a chance for cannabis companies to obtain financial aid; and in particular ancillary businesses that don’t physically touch the plant, like MassRoots. The Denver-based company was successful in applying for the loan, which Dietrich says made his legal counsel feel “comfortable” in doing so.

Some ancillary cannabis companies may be eligible for CARES Act federal funding 

Unlike other cannabis companies, such as cultivators, processors and manufacturers, MassRoots only accepted three percent of its entire 2019 revenue from cannabis companies. The remaining revenue was sourced from institutional investors something that gave MassRoots leverage in gaining acceptance for a loan amid COVID-19. This, Dietrich says, can also benefit other ancillary businesses. Although the first round of payments ran dry within two weeks, Senate leaders consented additional funding during a hearing on the Senate floor on April 21,

According to legal experts who specialize in the insurance and cannabis space, just a handful of ancillary cannabis businesses may be in with a chance of receiving economic relief to recover from the damage caused by COVID-19. Experts are advising ancillary businesses to clarify on their loan application that they are not an “indirect [cannabis] business”. Essentially this means that they work on the “outskirts” of the industry, so to speak, and are therefore not closely involved in any activities that breach local, state and federal laws. 

Back in April, the news was raised that the SEC filed a lawsuit alleging that Douglas Leighton a long-time cannabis investor had cashed in millions of dollars in collaboration with six associates through stock manipulation tactics involving MassRoots. The Denver cannabis company can be found trading on over-the-counter (OTC) markets under the ticker “MSRT”.