One of the biggest hardships for businesses operating in the legal cannabis industry in any state is the lack of access to traditional banking services. Since cannabis is illegal on a federal level, most banks have been weary about working with these state-legal businesses. However, this could change in the future with the potential for new protection for banks and newly introduced legislation that would provide cannabusinesses with access to loans and loan guarantees through the Small Business Administration, if passed.
“As the only House Committee dedicated solely to the needs of small firms, it is important for us to be shedding light on the challenges these small entities face as well as the economic potential they offer,” Velazquez said at the time.
The Ensuring Safe Capital Access for All Small Business Act of 2019 was introduced by U.S. House Small Business Committee Chair Nydia Velazquez – addressing the fact that funding and other traditional means of obtaining capital to grow a business are currently not available to those in the marijuana industry. This bill would make these businesses eligible for programs like SBA-backed microloans and loan guarantees with amounts limited at $5 million and guarantees limited at $3.75 million.
“By improving access to capital, this legislation will also help level the playing field for entrepreneurs from communities of color and others disproportionately impacted by the failed policies of prohibition seeking to enter the legal cannabis industry,” Executive Director of the National Cannabis Industry Association Aaron Smith said in a press release.
This bill is only one of three that has recently been introduced to address the issue of giving cannabis businesses access to the same loans that any other small business would be eligible to receive.
The first of the other two is the Ensuring Access to Counseling and Training Programs for All Small Businesses Act, introduced by Representative Jared Golden. This bill would prohibit Small Business Development Centers from withholding services from businesses just for being cannabis-related. The other bill is the Homegrown Act, sponsored by Representative Dwight Evans, which would provide state and local governments grants that would help with licensing and other financial challenges faced by many smaller cannabis businesses.
While these two pieces of legislation would be beneficial, neither goes quite as far as the Ensuring Safe Capital Access for All Small Business Act of 2019, which would ultimately provide access to millions of dollars in capital funding for businesses that are looking for access to funds and have been forced to look only to private investors and crowdfunding in the past. Though it still has to make its way through Congress before it can become a reality, this bill is certainly another step in the right direction on a federal level.