Colorado Launches 'Landmark' Cannabis Loan Program For Social Equity Businesses

Colorado Governor Jared Polis and the Cannabis Business Office (CBO) have launched the Cannabis Business Loan Program for social equity licensed cannabis businesses in the Centennial State.

The CBO had teamed up with lender NuProject to finance marijuana companies, which are not allowed to loan from traditional lenders.

“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 stated in the press release. “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.” 

With cannabis still being considered a Schedule 1 Drug under federal law, marijuana businesses don’t have access to capital via financial institutions. This is considered one of the biggest challenges in the industry. What’s more, IRS tax code 280E states that "no deduction or credit shall be allowed in running a business that consists of trafficking a controlled substance.” Therefore, until cannabis is removed from a list of controlled substances, there will be no tax deductions or credits given to legal cannabis operators.

The Cannabis Business Loan Program aims to address this major challenge by providing loans between $50,000 and $150,000 for renovations or expansions, the purchase of equipment, real estate or use as working capital.

Recipients of Cannabis Business loans are required to be social equity-licensed cannabis businesses that have been awarded a regulated business license from the Marijuana Enforcement Division. 

Revolving Fund

NuProject, which focuses on mission-based and character-based lending, already has a history of lending to cannabis businesses. Together with the CBO, it will run the Cannabis Business Loan Program as a revolving loan fund, which means as loans are repaid, the interest obtained will be used to invest into the fund to back future borrowers. 

The initial $1 million investment is expected to lend $2.9 million over the next 10 years, creating and retaining important jobs in Colorado, according to the press release. 

The Cannabis Business Loan Program is the third CBO funding source available for Colorado’s social equity licensed cannabis businesses. The Cannabis Business Grant, launched in 2021, provides $25,000 Foundational Grants to help early-stage cannabis businesses with their startup needs and $50,000 Growth Grants to support existing cannabis businesses as they grow or refine their operations.

The Cannabis Business Loan Program is designed to support larger, more established cannabis businesses as they continue to grow.

Photo: Benzinga edit with images by Wikimedia Commons and cannabis money hvoenok and gor photo on Shutterstock