Colorado became one of the first states in the country to offer business loans to the cannabis industry on Monday.
Gov. Jared Polis‘ administration launched the program in an effort to target Colorado’s social-equity licensed cannabis businesses. It will offer loans between $50,000 and $150,000 to go toward renovations, equipment, expansions and more.
The program will be treated as a revolving loan fund, with interest returning to it. As a result, the initial $1 million put into the program is predicted to yield $2.9 million over the next decade.
The program “will create and retain 239 good-paying jobs and promote equity in the cannabis industry by providing growing businesses access to funding,” Polis said. “I am committed to saving small businesses money and ensuring our state remains a great place to start and run a business in every industry.”
Forty states and Washington, D.C, have legalized medical marijuana, but cannabis businesses are hamstrung by the absence of federal legalization because it impacts their access to banking services such as loans.
For instance, payroll services company Paychex recently announced that it won’t cater to cannabis businesses, as of May 1. According to a corporate memo, these businesses “continue to face significant banking obstacles because major banks will not allow electronic fund transfers” to their networks, due to differing state and federal regulations around cannabis.
To qualify for Colorado’s new loan program, the recipient must be considered a social equity licensed cannabis business with a regulated business license from the Marijuana Enforcement Division.
The Cannabis Business Loan Program is aimed at larger businesses, but other options exist for startups, like the Cannabis Business Grant.
Colorado’s Cannabis Business Office partnered on the new endeavor with Portland-based NuProject, which offers funding, coaching and networking to historically-underserved cannabis entrepreneurs. NuProject has put forward $2.3 million in loans and grants since it was established in 2018.
“When cannabis business owners have access to financial support and the know-how to put that funding to work, they can run better businesses and have the opportunity to build generational wealth through the cannabis industry,” said CEO Jeannette Ward Horton.
Update at 4:25 p.m.: Because of incorrect information provided by Colorado’s Office of Economic Development and International Trade and the Governor’s Office, this story was updated to reflect that Colorado was one of the first U.S. states — and not the first — to offer business loans to the cannabis industry. Illinois operates its own social equity cannabis loan program.
