The Small Business Association or SBA has been responsible for making the American dream come true for small business owners by providing tools to assist in launching businesses. Small companies with businesses in states with medical or recreational marijuana programs are being locked out of the resources provided by the SBA. According to the Green Market Report, last month the SBA released new guidelines called the Revised Guidance on Credit Elsewhere and Other Provisions in SOP 50 10 5(J) preventing “the SBA from supporting loans to small businesses associated with the cannabis industry”.
Behind The SBA’s New Cannabis Business Guidance
The agency which is currently led by Linda McMahon, confounder of the World Wrestling Entertainment company, released the guidance to “specifically address businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana” according to the agency’s website. Standing in alliance with the federal banking laws, the guidance is very direct in stating that “businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance”.
This announcement comes as no surprise to companies who directly handle marijuana products like cultivators, manufacturers, and dispensaries. The real concern is for the ancillary service and product providers like “architecture firms, accountants, garden supply businesses and even construction companies” as reported by the Green Market Report.
SBA Guidance Could Really Hurt Ancillary Services In Cannabis
Ancillary services are the heart of the cannabis industry. For example, accountants are important to ensuring a cannabis company’s financials, just like a security firm is critical to protecting the product, the people and, the money in a cash-heavy industry. The cannabis space offers the same opportunities that traditional industries provide for support services, but this new guidance creates challenges for small cannabis businesses to even get in the game without the same help that non-cannabis related businesses receive from the SBA.
The SBA was created by the Federal government in 1953 to “aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation” according to the agency’s website. They do this by providing “loans, loan guarantees, contracts, counseling sessions and other forms of assistance to small businesses.” Essentially, they are responsible for helping small businesses be competitive by supplying them with resources and tools. Holding back funding to small cannabis-related businesses locks out “ma and pop operations” from getting their share of a very profitable industry where “legal cannabis sales are expected to grow to $2.57 billion this year, up from $1.53 billion a year ago” according to the Los Angeles Times.
To Read The Rest Of This Article By Ayanna Rutherford on Pot Network
Published: May 09, 2018
Founder & Interim Editor of L.A. Cannabis News