A group of 10 senators recently sent a letter to Appropriations Committee leadership, requesting that language allowing marijuana businesses to access loans and other aid through the federal Small Business Administration (SBA) be included in an upcoming spending bill report.
The letter, led by Sen. Jacky Rosen (D-NV), describes the unique financial barriers that state-legal cannabis companies face while marijuana remains federally illegal. The senators said freeing up SBA loans and disaster assistance for the industry is especially needed because the funds “would fill gaps left by the private sector and help mitigate the effects of the COVID-19 pandemic.”
To that end, the lawmakers—including Sens. Bernie Sanders (I-VT) and Cory Booker (D-NJ)—submitted the request for a policy change to the heads of the Senate Appropriations Committee and the Appropriations Financial Services and General Government (FSGG) Subcommittee late last month. They specifically asked that language be added to the fiscal year 2022 FSGG spending bill report to ensure SBA is authorized to issue loans to these businesses.
The report should call on SBA to stop “denying loan applications for the 7(a) Loan Guarantee Program, Disaster Assistance Program, Microloan Program, and 504/Certified Development Company Loan Program to legally operating cannabis small businesses in states that have legalized cannabis sale and use,” the letter says.
“SBA’s current policy excludes small businesses with ‘direct’ or ‘indirect’ products or services that aid the use, growth, enhancement, or other development of cannabis from SBA-backed financing,” it explains. “Consequently, small businesses in states with some form of legal cannabis must choose between remaining eligible for SBA programs and participating in or doing business with a rapidly-growing and legal industry.”
The letter also notes that while there has been a “clear shift in public opinion supporting legalization of cannabis in the United States,” many marijuana businesses still operate on a largely cash-only basis because many banks are not willing to take on clients that deal in a federally controlled substance.
“We strongly support SBA making all of its loan programs available to all state-legal cannabis small businesses,” the lawmakers wrote. “We, therefore, ask the Subcommittee on Financial Services and General Government to include language in your forthcoming legislation to help extend SBA loan programs to cannabis small businesses legally operating in states that allow the sale and use of cannabis for medical or recreational purposes.”
The letter’s other signatories include: Sens. Jeff Merkley (D-OR), Maria Cantwell (D-WA), Ed Markey (D-MA), Ron Wyden (D-OR), Bob Menendez (D-NJ), Alex Padilla (D-CA) and Raphael Warnock (D-GA).
This is a continuation of a conversation that has really heated up amid the coronavirus pandemic.
In February, Rosen pressed the then-nominee for SBA administrator, Isabella Guzman, on helping cannabis firms access assistance from the agency. The since-confirmed official simply committed to “further understanding those rules and regulations” and working with the senator’s office.
SBA confirmed last year, as the pandemic broke out across the country, that state-legal cannabis businesses are ineligible for federal disaster relief loans offered to other small businesses. The agency went even further to say that the loans are also off-limits to businesses that indirectly serve the marijuana industry.
Rosen, Wyden and other lawmakers later penned a letter to Senate leadership in April of last year arguing that the cannabis industry deserved equal access to federal relief.
By the end of that month, supportive lawmakers in Congress had introduced a bill to extend access to coronavirus relief funds to state-legal cannabis businesses, but the measure did not come to a vote.
Then in September, wildfires on the West Coast hit marijuana growers hard. Oregon regulators, for instance, said 20 percent of cannabis companies in the state had been encouraged to evacuate. But SBA officials said cannabis operators could not apply for disaster relief loans because marijuana remains federally prohibited.
That said, the agency has touted its work to support companies in the newly legal hemp industry, and it has pressed the U.S. Department of Agriculture to make its rules on the crop more favorable to small businesses.
Read the senators’ letter on SBA assistance for marijuana businesses below:
FSGG letter on marijuana SB… by Marijuana Moment
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