New Mexico Explores Public Funding For Cannabis Companies
SANTA FE, NM (AP) – Small marijuana businesses in New Mexico would have access to publicly funded loans of up to $ 250,000 to promote social and economic equity, as part of of a proposal unveiled Thursday.
The New Mexico Financial Authority has suggested a $ 5 million line of credit to licensed cannabis microenterprises, seeking preliminary approval from a panel of state lawmakers. The panel voted 6-5 against immediate approval, delaying the effort amid a variety of concerns about the emerging recreational pot industry lending rules.
Under the proposed lending rules, loans would be made available to qualified cannabis âmicroenterprisesâ that are licensed to grow and sell marijuana from no more than 200 plants in one location, functioning much like a plant. artisanal cellar or brewery. This business niche was cleared in sweeping legislation to regulate and tax sales of recreational marijuana, signed by Democratic Gov. Michelle Lujan Grisham in April.
The law requires the state to promote business opportunities for communities that have been disproportionately penalized by previous criminal enforcement of marijuana laws, without saying exactly how. The social justice provisions also prescribe some form of assistance to farmers in economically disadvantaged communities and residents of rural areas where the marijuana industry may be established.
New Mexico Financial Authority CEO Marquita Russel, architect of the draft loan program rules, said traditional business loans were still scarce for small cannabis entrepreneurs.
âThey have very few options. If you’re a start-up cannabis micro-business, you can’t go to a bank, you can’t go to the Small Business Administration, âshe told lawmakers. “There is no place for a small business to get a loan like this.”
The proposed loan program would be funded by the State Economic Development Revolving Loan Fund, which helps stimulate the economy in remote areas of the state. Russel said the program would draw on unused loan reserves, including unspent money earmarked for essential services during the coronavirus pandemic.
State cannabis and financial regulators have recognized that challenges likely lie ahead in reviewing applications for small loans from unproven businesses in a start-up industry emerging in part from the black market.
âWe expect most of them will not have up-to-date financial statements,â Russel said.
Experienced medical marijuana businesses would not be eligible for the proposed lending rules aimed at helping newly licensed small growers.
Republican State Senator Stuart Ingle de Portales warned that it could be difficult to fully recover loans from marijuana growers and pointed to the lack of farming and ranching experience among members of the board of directors of the New Mexico Finance Authority.
âThere are still so many questions here that cannot be answered,â he said. “We may have to slow things down.”
Sales of state-sanctioned recreational cannabis are expected to begin no later than April 1. State cannabis regulators have received at least 22 license applications to form a cannabis microenterprise, according to public records.
In order for the loan program to move forward, the approval of a legislative oversight committee and the board of directors of the New Mexico Financial Authority which includes several state cabinet secretaries and representatives. municipal and county governments is needed.
Loan applications would require repayment guarantees such as land or equipment, with loan periods of up to five years.
âWe will be completely secure. These are our dollars, they have to be paid back, âsaid Russel. “These are not (loans) for people who have sort of decided that this could be fun.”