Cannabis Industry Could Soon Have Access to Federal Funding

The cannabis industry is fighting for social equity and access to the Small Business Administration.

Cannabis fighting for access to the SBA iStock / mj0007

Marijuana is now a booming, multi-billion dollar industry, but already, like in most sectors of the economy, minorities are feeling locked out. However, a new piece of legislation is being dropped soon to directly address that problem.

National Cannabis Industry Association board member Khurshid Khoja (accidentally, it seems) announced the new measure at a small gathering of marijuana advocates in Washington knocking on lawmaker’s doors. The legislation’s aim is to provide access to the services and capital that the Small Business Administration already offers to non-cannabis businesses. The exact details of the measure are still being negotiated behind closed doors though.

“That’s still in development,” Khoja, who is also with Greenbridge Corporate Counsel, told The Stash. “So it’s not in print yet. We’re still working on it.”

The bill’s intended to be a companion to one of the numerous measures speeding through the House of Representatives to grant cannabis businesses access to the American banking system. While marijuana businesses desperately want to stop being all cash – in many respects that’s a white and male problem. Many minorities report facing hurdles to even entering this blossoming new industry because it’s an expensive arena to compete in and the costs of entry are only increasing as legalization takes root from coast to coast.

“They’re [minority business owners] not going to travel in the circles where they can access capital easily. They probably don’t even know how to do that,” Khoja said.

Advocates and lawmakers are now taking aim at the Small Business Administration (or SBA) because it’s a natural step once marijuana businesses are granted access to the banking system, which many proponents predict we’re on the precipice of witnessing. The thinking is, once cannabis business owners are treated equally in terms of finances, why should the sector continue to be locked out of other benefits that the government has to offer.

“This is legal business, so they should have access to the same banking, tax, finances – all those other support mechanisms – they should have access to on an equal basis,” Khoja said. “That’s all we’re asking for. It’s fairness at the end of the day. So we’re not asking about anything that is advantaging cannabis business over others, just, let’s level the playing field.”

Social Equity Needs To Be A Priority

While the new legislation isn’t even done being drafted, and thus doesn’t even have an official sponsor yet, it’s already getting lawmaker’s attention. 

Representative Barbara Lee, SBA

Representative Barbara Lee

“We have to have access to financial services and traditional legitimate banking services for the cannabis industry because it is a legitimate industry,” Rep. Barbara Lee (D-Calif.) told The Stash. “We have to have the equity requirement, and it can’t be optional. It’s got to be a requirement that there be equity.”

Lee and others are vowing to not allow minorities to be left behind this time around.  

“Look at the lack of African American and minority inclusion in every sector in this country,” Lee said. “Here we are at the beginning, and on the front end we can’t make the same mistakes, like for example the tech sector made — horrible mistakes.”

Amber Littlejohn of the Minority Cannabis Business Association is helping draft the new measure, and she contends proposals like these may not garner headlines like legalization efforts do but that doesn’t mean they’re not a vital component of the move to end prohibition at the federal level. The fight for legalization must have an eye towards providing justice for the very communities punished hardest by the decades-long war on drugs.

“These really kind of un-sexy issues, like SBA and banking, impact us so much heavier because we can’t get any traditional forms of capital,” Littlejohn told The Stash. “We don’t have family members to access, and then when there’s this kind of sketchy discretionary lending practices – discretionary anything doesn’t shake out well for black people.”

The SBA Is A Necessary Resource For Cannabis

Cannabis businesses access to SBA

iStock / SEASTOCK

The SBA offers some business services besides microloans, like helping with business planning and even giving tips on filling out the reams of paperwork required to get a business off the ground. Without access to SBA programs, cannabis entrepreneurs are already at a disadvantage, and it’s costing them cash money because they’re having to expend capital where other business owners don’t, which is only compounded by the hazy and utterly confusing state of American marijuana laws.

“Cannabis companies are being bled dry by – everybody’s a Canna-consultant, everybody’s a Canna-ttorney,” Littlejohn said. “You’re getting really expensive information that isn’t always quality.”  

Even without the consultants and lawyers bleeding this new crop of marijuana businesses owners, there are also just simple questions of fairness and justice these advocates and lawmakers are demanding the nation address with this burgeoning economic sector. That’s why the SBA is seen as a vital booster shot – not a handout.

“It’s absolutely important – black women are the fastest growing and largest small business owners, but they have the least access to capital,” said Shanita Penny – the president of the Minority Cannabis Business Association, told The Stash. “This isn’t kind of one of those boot-strapping kind of places – just to get in you have to make a significant investment.”

Cannabis Is Still A Schedule I Drug

But, as with all things marijuana-related these days, it’s all complicated by the fact that marijuana remains listed alongside heroin in the federal government’s eyes. That’s why even supportive lawmakers recognize these efforts to boost their local businesses need to ultimately be coupled with federal legalization or decriminalization.

“Cannabis is still a Schedule 1 controlled substance, so as long as that happens, I think it’s hard to get the federal government to do anything,” Rep. Diana DeGette (D-Col.) told The Stash.

Even with that huge hurdle to overcome on ending prohibition in Washington, some of the loudest proponents of legalization argue this new industry that’s growing out of the ashes of the failed war on marijuana can’t be color blind.  

“I think we start off by recognizing that a lot of the criminal justice – a lot of the arrests have been in the folks of color,” Rep. Lou Correa (D-Calif.) told The Stash. “Reverse it. Grow the pie. And make sure we have got entrepreneurs ready to take advantage of the opportunities.”

 

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