A coalition of Democratic senators is urging key committees to include provisions in upcoming spending bills to ensure small marijuana businesses have equal access to federal Small Business Administration (SBA) loan programs and entrepreneurial development resources that are also available to businesses in other industries.
In a letter sent to the Senate Appropriations Subcommittee leadership last month and published in a press release on Monday, the senators requested that language be added to the FY2025 Financial Services and General Government Affairs (FSGG) spending bill to prevent the SBA from “denying loan applications for the 7(a) Loan Guarantee Program, Disaster Assistance Program, Microloan Program, and 504/Certified Developer Loan Program to small businesses operating legally in states that have legalized the sale and use of cannabis.”
The letter, led by Sen. Jacky Rosen (D-Nevada), urges committee leaders to add language to the spending bill that would “prohibit the SBA from excluding state-legal cannabis businesses from participating in or receiving the benefits of SBA entrepreneurial development programs.”
The senators noted a “clear shift in public opinion” in favor of reform, with the majority of states having enacted some form of legalization and marketplaces that have generated billions of dollars in tax revenue.
In addition to Senator Rosen, the letter was signed by Senators Cory Booker (D-NJ), Jeff Merkley (D-Ore.), Ron Wyden (D-Ore.), Tammy Duckworth (D-Ill.), Martin Heinrich (D-New Mexico), John Hickenlooper (D-Colorado), Ed Markey (D-Massachusetts), Alex Padilla (D-Calif.) and Michael Bennet (D-Colorado).
“However, under SBA's current policy, any small business that 'directly' or 'indirectly' provides products or services that support the use, growth, enhancement, or other development of cannabis is excluded from its loan and entrepreneurial development programs,” the senators wrote. “As a result, small businesses in states where cannabis has been legalized in any form must choose between remaining eligible for SBA loans and assistance or participating in or doing business with a burgeoning legal industry.”
This is at least the third time Rosen has sent letters to appropriations subcommittee leaders in recent sessions with a similar request, but the requested language has yet to be included in any spending bill.
“Currently, most banks are reluctant to provide services to state-legal cannabis businesses due to conflicts with federal law, forcing these legally operating small businesses to often operate on a cash-only basis, potentially putting public safety at risk in order to conduct business,” the lawmakers said in the new letter. “The SBA lending program would be especially helpful to cannabis small businesses because it would fill the gap left by the private sector and expand access to capital for many entrepreneurs, including minority-, women-, and veteran-owned businesses.”
Senate leaders have repeatedly discussed prioritizing a bipartisan bill this year to provide protections for financial institutions that do business with state-licensed cannabis businesses, but it remains to be seen whether it will ultimately move forward, especially given reported resistance from key Republicans, including Senate Minority Leader Mitch McConnell (R-Ky.).
Rosen said last year that he ultimately wants to amend the Secure and Fair Enforcement and Regulation (SAFER) Banking Act to include provisions that would allow cannabis-related businesses to access SBA services.
“Access to SBA loans and entrepreneurial programs will create jobs, support small businesses, and help a fast-growing industry that will generate revenue in states that choose to legalize cannabis,” the new letter, written by her and nine other Democratic senators, reads.
“We strongly support the SBA making all of its programs open and available to all cannabis small businesses legalized by state law. Therefore, we urge the Financial Services and General Government Subcommittee to include bill language in upcoming legislation to expand SBA loan and start-up programs to cannabis small businesses operating legally in states that allow the sale and use of cannabis for medical or recreational purposes.”
Rosen also helped defend language in a recently introduced federal marijuana legalization bill that would require the SBA pilot program to “make loans directly to qualified intermediaries, who in turn make small business loans to start-ups, businesses owned by individuals adversely affected by the War on Drugs, and socially and economically disadvantaged small businesses.”
“Small businesses are the backbone of Nevada's economy, which is why I'm leading the effort to eliminate bureaucratic red tape that prevents small businesses from accessing capital and work to secure federal funding for the resources they need to thrive,” Rosen said in a press release about the cannabis letter and three other requests he recently led.
Read the Senators' letter regarding SBA access for the cannabis industry below.
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