Should state finance marijuana businesses?
Bill creating a special loan fund moves forward
AS FANTASTICAL as the idea sounds, a bill that would establish a state-backed loan fund to help marijuana businesses was reported favorably out of a legislative policy committee this week.
Sen. Sonia Chang-Diaz, a Boston Democrat and advocate for minority communities who chairs the Joint Committee on Cannabis Policy, said the fund could be “a critical and efficient step” in helping communities harmed by the war on drugs, where many entrepreneurs lack financial backing. Small and minority entrepreneurs have so far struggled to gain a foothold in an industry dominated by multi-state medical marijuana companies.
“Many talented small businesses and individuals are waiting in the wings, ready to provide value to the market and build wealth in their communities, if they can just get a foot in the door with start-up capital,” Chang-Diaz said.
Traditional business loans generally are not available to marijuana entrepreneurs, since banks are subject to federal regulations and marijuana remains illegal federally.
The legislation envisions a “Cannabis Social Equity Loan Trust Fund” that would make no-interest loans to economic empowerment applicants and social equity program participants – groups of marijuana entrepreneurs who are generally Massachusetts residents from communities disproportionately affected by enforcement of marijuana laws, including racial minorities, people with drug arrests, and people living in areas with high drug arrest rates.
The loan fund would get up to 10 percent of the revenue collected by the state’s marijuana excise tax, and that money would have to be matched by private donations. The most obvious source of those donations would be larger marijuana companies who are required by state law to implement social impact plans.
The bill would also codify into law the Cannabis Control Commission’s social equity program, which offers technical assistance to equity applicants.
The Cannabis Control Commission had requested that lawmakers create such a fund. Commission officials wrote in a letter to legislators that a number of marijuana businesses already have funds in escrow waiting to contribute to such a fund, and others have expressed willingness to donate.
Another request made by the CCC – to require municipalities to prioritize social equity applicants – was not included in the bill.The bill is moving forward days before Monday’s opening of the state’s first marijuana store run by an economic empowerment applicant – Pure Oasis, which will also be the first store to open in Boston.
Pure Oasis is planning a press conference Friday with Hoffman and Mayor Marty Walsh, another former opponent of marijuana legalization, who has been criticized for the slow pace of the industry’s rollout in Boston.