A new program from Colorado’s Cannabis Business Office and nonprofit partner NuProject will provide loans to cannabis social equity businesses.
BY A.J. HERRINGTON APRIL 26, 2023
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Colorado Governor Jared Polis on Monday announced the launch of a new state-funded loan program for cannabis social equity businesses.
The new program is designed to provide financing to licensed social equity cannabis businesses, which typically face difficulties raising the capital needed to launch and grow their enterprises. The initiative will be administered by the state Cannabis Business Office (CBO) within the Colorado Office of Economic Development & International Trade (OEDIT) in partnership with NuProject, a Portland, Oregon-based organization working “to build generational wealth via the legal cannabis industry for the Black and Brown communities disproportionately harmed by the War on Drugs,” according to the group’s website.
“This landmark loan 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 in a statement from the governor’s office on Monday afternoon. “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. Thank you to NuProject for partnering with Colorado on this exciting milestone and working to support innovation in Colorado’s cannabis industry.”
Cannabis And Capital in Colorado
Cannabis companies have historically faced problems raising capital due to a variety of factors including federal banking regulations and the continuing stigma associated with marijuana and cannabis users. The lack of financing can be particularly challenging for social equity business owners, who often face additional obstacles including racism and generations of economic marginalization.
To help them deal with such challenges, Colorado’s Cannabis Business Loan Program will provide low-interest loans of between $50,000 and $150,000 for social equity cannabis businesses to finance renovations or expansions, the purchase of equipment, real estate or to use as working capital.
The governor’s office notes that NuProject has a proven history of lending to cannabis businesses, specializing in mission-based and character-based lending. The non-profit’s practices can help entrepreneurs obtain loans even if they have limited cash flow, lack the traditional assets necessary to secure financing or have experienced other challenges in obtaining financing. NuProject also provides mentorship and educational resources to prepare business owners to complete loan applications.
“NuProject is committed to redirecting the typical flow of financing so that small business owners in the cannabis industry, especially those who’ve been historically excluded from access to capital, can access the resources they need to grow their businesses,” said NuProject CEO Jeannette Ward Horton. “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.”
NuProject and the CBO will administer the Cannabis Business Loan Program as a revolving loan fund. As loans to business owners are repaid, the interest generated will be reinvested into the fund to support future borrowers. The state’s initial investment of $1 million is expected to lend $2.9 million over the next 10 years, creating and retaining jobs in Colorado, according to state officials.
The Cannabis Business Loan Program is the third CBO funding source available for Colorado’s licensed social equity cannabis businesses and is designed to support larger, more established cannabis businesses as they continue to grow. The Cannabis Business Grant, launched in 2021, provides $25,000 Foundational Grants to help early-stage cannabis businesses with the costs to launch their operations and $50,000 Growth Grants to support existing cannabis businesses as they expand or refine their operations.
“Colorado’s Cannabis Business Loan Program is at the forefront of the cannabis industry, creating a new model to help these small business owners access the resources they need to grow and thrive,” said Eve Liberman, OEDIT executive director. “Together with NuProject, the Cannabis Business Office is making it possible for cannabis businesses to grow, create new jobs and contribute to a Colorado economy that works for everyone.”
Activists Seek More Support For Social Equity Businesses
Sarah Woodson, a cannabis social equity advocate and business owner, welcomes Colorado’s new loan program for eligible companies in the industry. But she also would like the CBO to update the public on the success of the earlier grant programs.
“It would be interesting to see what has happened with the money that has been given out so far,” Woodson told Westword. “I don’t think many of those businesses have opened yet.”
Woodson is calling on Colorado lawmakers to pass House Bill 1020, legislation that would allow social equity cannabis businesses to make deliveries directly to consumers without partnering with a licensed dispensary. The bill has been pending in the legislature for more than three months but has so far received only two hearings. Woodson said that the bill is being delayed by opposition from the established cannabis industry and a lack of funding. According to a fiscal note on the bill, creating the new licensing system necessary to implement the legislation would cost slightly more than $360,000.
“All we need is about $370,000 to pass our bill, yet we can’t find that,” she said.
Woodson said she is preparing a public records request to learn how much previous funding has been spent. If there is remaining funding, she would like to see the CBO cover the costs of implementing House Bill 1020.
“If there’s over $2 million left, then $370,000 shouldn’t be an issue,” she said. “If there’s $1 million or less, then that is a different issue.”
“The natural nexus is the CBO office, but we want to be respectful of what they have planned. We just want to know how much money is left, and that’s not very clear,” she added. “We’re asking for less than $370,000 for existing businesses to stay in business, many of which were started by the CBO. Social equity is one of the governor’s wildly important goals, so we need to get this done.”