How SBA Loan Funding Could Transform the Retail Cannabis Industry

Nov 29 , 2022

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Stacey Lukac

 How SBA Loan Funding Could Transform the Retail Cannabis Industry

Msnmarijuanasup SBA Loan Funding Article

 

Marijuana sales reached a massive $25 billion in 2021, with more than 44% of Americans finally gaining access to recreational cannabis-related products with child-resistant packaging. To put that in perspective, the US sushi restaurant industry only brings in about $24.7 billion during the same period. That means more people are enjoying the sweet vibes of smooth indigo compared to mouthwatering Unagi rolls.

 

Yet, there is a significant difference that is worth pointing out. While the marijuana industry may make more financially, they are nowhere near as capable of expansion as sushi-grade tuna slingers in NYC or LA. 

 

Why? Any cannabis-related business operating in the US today does not have access to the lending variety of options as a “traditional” business.

 

What are SBA Loans?

 

SBA stands for the U.S. Small Business Administration. It is a government-funded organization that helps businesses match up with banks and other lending opportunities to scale their operations. This means they get access to funding for new equipment, inventory, workers, marketing, or anything else needed to improve business operations.

 

The way it works is this. A business can apply for startup funds, working capital, expansion needs, real estate purchases, and more through the SBA-approved list of banks or credit unions. These lenders get a loan guarantee, so if your business defaults on its lending agreement, the federal government repays the banks who originally lent you money.

 

Sounds like a win-win, right? Unfortunately, the SBA will not issue or guarantee loans to any cannabis-related business because of the potential legal trouble between federal and state agencies. In other words, if you are a cannabis wholesale packaging company like us, you’re screwed.

 

Hello, and Thank You, Nevada

 

A new light of hope is opening the potential business door to startups and established cannabis companies across the US due to the recent introduction of a brand-new bill in Congress. On Thursday, November 17, Senator Jacky Rosen (D-NV) introduced new legislation that would transform how the SBA does business.

 

This bill would transform how state-legal marijuana businesses gain access to certain federally-backed SBA loans and services. The goal is to provide more financial capital to businesses already succeeding in their industry and offer pathways for startup companies to rapidly scale to meet the growing consumer demand.

 

Essentially, if you operate a dispensary or other cannabis business, you could afford to upgrade your automation, machinery, growing stations, marketing, and state-compliant packaging, or finally hire enough people to run the business while you take a well-deserved vacation.

 

It does not remove federal arguments and legal provisions. It allows the SBA to change the language of its lending policies so that services cannot be denied to businesses based solely on cannabis-related operations. This also includes provisions for greater access from resource partners like SBA development centers, women’s business organizations, and veteran's business outreach programs.

 

Finding Massive Support

 

This new bill is not a shot out of the dark. One day before Senator Rosen’s proposal, President Biden signaled he would sign the bipartisan marijuana research bill that Congress passed. This marks the first time the US has ever had a standalone piece of cannabis reform legislation get approval by a sitting president.

 

On the very same day, senators Christ Van Hollen (D-MD) and Rob Portman (R-OH) partnered with representatives Danny Davis (D-IL) and David Schweikert (R-AZ) to file legislation that would repeal the lifetime ban on receiving American Opportunity Tax Credits for students with previous felony drug possessions.

 

All three of these events are a clear signal to the Justice Department and US citizenry that we are well on our way toward full legalization or at least decriminalization of marijuana as a recreational substance.

 

What Does This Mean for Cannabis Businesses?

 

With access to SBA funding, the marijuana industry would experience a radical transformation. Instead of having to do some creative accounting or working with less than reputable funding sources, entrepreneurs with the knowledge and determination to establish a retail cannabis business would suddenly see a quick infusion of low-interest lending.

 

Not only will this positively change the industry in the right direction, but it will also make meeting the various state compliance packaging requirements easier. Businesses will have the capital to invest in custom cannabis packaging aligned with the often overzealous standards of ever-changing legal battles and regulatory agencies.

 

Then there are the capital reinvestment opportunities in business operations. Growers could upgrade their machinery. Retail businesses could start broader marketing. Even complementary companies offering THC-infused ointments could hire a few more people to operate the production line.

 

All in all, this is a significant step toward freeing up the much-needed resources of an accelerating growth industry.

 

We at MSN Packaging say thank you to Senator Rosen and anyone else willing to allow the free market expansion of marijuana-related products in the USA. As a cannabis wholesale packaging business, we understand firsthand the benefits this bill will provide to our niche and look forward to the day it is signed into law.

#Child Resistant packaging, #Cannabis Wholesale Packaging, #State Compliant Packaging, #Custom Cannabis Packaging


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