In a move that could help capital-starved social equity businesses compete with deep-pocketed investors, a U.S. senator introduced a bill that would enable marijuana entrepreneurs to receive Small Business Administration (SBA) loans.
If approved by Congress and signed into law by President Joe Biden, the Fair Access for Cannabis Small Business Act introduced by Sen. Jacky Rosen, D-Nevada, would open SBA programs to “legally operating cannabis businesses” who are currently prohibited from such federal assistance.
That second-class status was keenly felt during the worst months of the COVID-19 pandemic in 2020, when emergency payments and forgiven loans from the Paycheck Protection Program extended to most U.S. owners were not available to plant-touching firms.
That disparity hurt small companies more than well-capitalized multistate operators.
“The unfair barriers to basic federal support and resources have hurt our state’s legally-operating cannabis small businesses,” Rosen said in a statement announcing his legislation.
Rosen’s bill is one of several up for consideration in the lame-duck session of Congress that ends in December.
While most industry attention is on the SAFE Banking Act, which would prohibit federal banking regulators from punishing financial institutions that offer banking services to legal cannabis operators, Congress last week sent a marijuana research bill to Biden’s desk.
Though some states offer social equity businesses assistance in the way of startup capital or built-out facilities, access to SBA loans would be a major milestone and significant boost to diversifying the marijuana industry, advocates said.
“Senator Rosen’s landmark legislation would help advance equity and innovation in the cannabis industry by leveling the playing field for independent cannabis operators,” Khadijah Tribble, CEO of the U.S. Cannabis Council and a senior vice president at Curaleaf Holdings, said in a statement.
“If paired with the SAFE Banking Act, The Fair Access for Cannabis Small Businesses Act would create a regulatory framework that would ensure a vibrant startup scene and a diversity of players.”