Tensions have long existed between the federal government and the legal cannabis market. The main point of controversy is simple: weed is illegal at the federal level but is legal in a growing number of states. This fundamental discrepancy has created a lot of confusion and uncertainty. And now, a new policy that forbids marijuana business owners from taking out loans could significantly intensify these tensions.
Small Business Administration Cracks Down
The U.S. Small Business Administration (SBA) quietly introduced a new policy that could have serious implications for a huge number of businesses and business owners.
Under the new policy, the SBA will no longer approve loans for any business that makes revenue from the marijuana industry.
On the surface, the policy looks like it will only impact the legal cannabis industry. But the reality is much different. The policy has the very real potential to negatively impact a massive number of businesses.
That’s because there are actually way more companies that make money from the weed industry than just those that deal directly with cannabis.
Of course, marijuana growers, manufacturers, and dispensaries will be affected by the new policy. But it could also affect all the other ancillary businesses that are now involved with legal marijuana.
At this point, there are numerous marketing agencies, lawyers, media companies, gardening and farm supply centers, electrical companies, and many other businesses that in some way work with and make a portion of their money from the marijuana industry. Under the new policy, they could all be disqualified from receiving loans.
“This rule would be impossible to implement and wreak havoc across multiple sectors of the economy,” Oregon Rep. Earl Blumenauer said. “For example, would just one order from a cannabis business for soil preclude a locally-owned garden center from receiving federal government loan support in the future?”
Final Hit: New Policy Forbids Marijuana Business Owners From Taking Out Loans
The SBA does not make loans directly. Rather, it approves which loans will be guaranteed by the federal government. In this way, the agency exerts huge influence over who does and does not end up receiving loans.
Obviously, the new policy could be harmful to the quickly-growing cannabis industry. And that in itself would affect a large number of people.
The legal industry is now generating more than $8 billion a year. Similarly, it has directly supported an estimated 121,000 jobs.
Cannabis is already a large sector of the economy and it’s only expected to get larger. In fact, experts predict that the legal cannabis industry will generate $39.6 billion in overall economic impact by 2021. At that point, the industry is projected to support 414,000 jobs and produce over $4 billion in taxes.
The SBA’s policy could significantly harm businesses in this sector. Similarly, it could make it much harder for new business owners to move into the space.
Even worse, the number of those who could be negatively affected by the policy is exponentially larger when all ancillary businesses are taken into account.
Many of these businesses only make a small portion of their overall revenue from marijuana. Yet, according to the language of the SBA’s policy, they could also be disqualified from receiving loans.