The federal Small Business Administration (SBA) says that, as part of its efforts to undo the Biden administration\u2019s policies on financial lending, it has updated guidance clarifying that marijuana businesses are ineligible for key loan programs.<\/p>\n
In a report about the SBA policy changes that was published on Monday, congressional researchers said the agency is updating guidance for \u201cits two largest small business loan programs, the 7(a) and 504 loan guarantee programs,\u201d which includes making clear that the cannabis industry is precluded from those services.<\/p>\n
\u201cOther new loan eligibility modifications in the SOP include\u2026reinstating pre-2023 guidance that removes eligibility for businesses with operations related to marijuana, hemp, and cannabidiol,\u201d it says.<\/p>\n
While the latest SBA guidance that will take effect on June 1 reinstates similar language around cannabis that had been excluded under the last two versions that came out when Joe Biden was president, legal experts have pointed out that those omissions did not necessarily signal that marijuana businesses were freed up to access federal loans under the program during that period.<\/p>\n
In fact, last year a coalition of Democratic senators specifically asked a key committee to include provisions in a spending bill allowing small marijuana businesses to have fair access to SBA services<\/a>, including the 7(a) and 504 loan programs.<\/p>\n But it\u2019s notable\u2014particularly at a time when the Trump administration\u2019s marijuana policy has come under sharp focus by the industry and advocates\u2014that SBA is now taking proactive steps to highlight the cannabis industry\u2019 ineligibility for federal support.<\/p>\n \u201cThe last Administration inherited a thriving 7(a) loan program but left it in critical condition\u2014dismantling every common-sense guardrail that kept it solvent and self-sustaining,\u201d SBA Administrator Kelly Loeffler said<\/a> in a press release that touches on a number of the current administration\u2019s concerns. \u201cFrom slashing lender fees to destroying underwriting standards, Biden\u2019s reckless policies have triggered a surge in defaults which now threatens the viability of the program along with its risk to taxpayers.\u201d<\/p>\n \u201cTherefore, the SBA is taking immediate action to restore prudent lending criteria, rein in risk, and save the 7(a) program before it collapses under the weight of bad policy,\u201d she said. \u201cBut the Biden Administration\u2019s actions to undermine the financial integrity of the program now threaten to leave taxpayers on the hook.\u201d<\/p>\n Again, while the changes to the guidance overall are characterized as a reversal of a Biden-era policy, it doesn\u2019t appear that the prior administration opened the doors to allow cannabis market access to SBA loan programs, even if the specific language was excluded from the last two versions of the document that were published in 2023.<\/p>\n That said, the new provisions on marijuana do differ from the earlier 2020 version that Trump\u2019s prior administration had enacted. Specifically, they seem to afford more flexibility around loan services for non-plant-touching businesses that are tangentially connected to the cannabis industry.<\/p>\n The prior guidance laid out a detailed definition for what is and isn\u2019t considered an \u201cindirect\u201d marijuana business that\u2019d be ineligible for loans under the 7(a) program, including any company that derives \u201cany of its gross revenue for the next year) from sales to Direct Marijuana Businesses of products or services that could reasonably be determined to aid in the use, growth, enhancement or other development of marijuana.\u201d<\/p>\n \u201cExamples of Indirect Marijuana Businesses include businesses that provide testing services, or sell or install grow lights, hydroponic or other specialized equipment, to one or more Direct Marijuana Businesses; and businesses that advise or counsel Direct Marijuana Businesses on the specific legal, financial\/accounting, policy, regulatory or other issues associated with establishing, promoting, or operating a Direct Marijuana Business. However, for purposes of illustration, SBA does not consider a plumber who fixes a sink for a Direct Marijuana Business or a tech support company that repairs a laptop for such a business to be aiding in the use, growth, enhancement, or other development of marijuana.\u201d<\/p>\n The latest SBA guidance<\/a> stipulates<\/a> that an ineligible business is one that \u201cgrows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity,\u201d as well as those that \u201csell smoking devices, pipes, bongs, inhalants, or other products if the products are primarily intended or designed for marijuana use or if the business markets the products for such use.\u201d<\/p>\n Like the prior version, the new document clarifies that legal hemp businesses are eligible for aid under the program.<\/p>\n \u201cThe SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the hemp meets the applicable definitions,\u201d it says. \u201cIn addition, for Applicants who will be growing, producing, and\/or processing hemp, the SBA Lender is responsible for obtaining from the Applicant documentation of the testing protocols the business will follow to ensure that the hemp and any product(s) they extract or produce from it continue to meet the applicable definitions.\u201d<\/p>\n Overall, SBA\u2019s revised guidelines contribute to a complex, quickly shifting narrative from the Trump administration around cannabis policy.<\/p>\n One of the most recent\u2014and, for the industry, troubling\u2014developments came last week from the U.S. attorney for Washington, D.C., who\u00a0recently warned a local medical marijuana dispensary about potential federal law violations<\/a>, hinting at the threat of enforcement action.<\/p>\n While shutting down licensed dispensaries doesn\u2019t \u201crise to the top\u201d of his priorities, Interim U.S. Attorney for the District of Columbia Ed Martin said his \u201cinstinct is that it shouldn\u2019t be in the community.\u201d<\/a><\/p>\n Late last month, meanwhile, the White House\u00a0called the District\u2019s move to decriminalize marijuana an example of a \u201cfailed\u201d policy that \u201copened the door to disorder.\u201d<\/a><\/p>\n During Trump\u2019s first term in the White House, he\u00a0maintained that D.C. rider to keep blocking cannabis sales<\/a>\u00a0in his budget requests, as did his successor, former President Joe Biden.<\/p>\n Also during his earlier term, Trump\u2019s first attorney general, Jeff Sessions, rescinded Obama-era guidance that generally advised federal prosecutors not to interfere with state marijuana laws.<\/p>\n As advocates and industry stakeholders have waited to see how the Trump administration will navigate cannabis policy issues during the current term\u2014and whether the president will push for reforms such as rescheduling and banking access as he endorsed on the campaign trail last year\u2014the fact his White House\u2019s first public mention of marijuana in its D.C.-focused fact sheet linked decriminalization to disorder sent a different message.<\/p>\n Meanwhile last week, an activist who received a pardon for a marijuana-related conviction during Trump\u2019s first term\u00a0paid a visit to the White House, discussing future clemency options with the recently appointed \u201cpardon czar.\u201d<\/a><\/p>\n Separately, a marijuana industry-backed political action committee (PAC) has released a series of ads over recent weeks that have attacked Biden\u2019s cannabis policy record as well as the nation of Canada, promoting sometimes misleading claims about the last administration while\u00a0making the case that Trump can deliver on reform<\/a>.<\/p>\n Its latest ad accused former President Joe Biden and his Drug Enforcement Administration (DEA) of\u00a0waging a \u201cdeep state war\u201d against medical cannabis patients<\/a>\u2014but without mentioning that the former president himself initiated the rescheduling process that marijuana companies want to see completed under Trump.<\/p>\n Adding uncertainty to that process, Trump\u2019s pick to lead DEA, Terrance Cole, is on record repeatedly\u00a0voicing concerns about the dangers of marijuana<\/a>\u00a0and linking its use to higher suicide risk among youth.<\/p>\n The current acting administrator, Derek Maltz, has\u00a0separately made a series of sensational claims about marijuana<\/a>, calling it a gateway drug that sets children up to use other substances, suggesting marijuana use is linked to school shootings and alleging that the Justice Department \u201chijacked\u201d the cannabis rescheduling process from DEA.<\/p>\n Earlier this month, DEA notified an agency judge that\u00a0the marijuana rescheduling process is still on hold<\/a>\u2014with no future actions currently scheduled as the matter sits before Maltz.<\/p>\n Meanwhile, a recent poll found that\u00a0a majority of Republicans back a variety of cannabis reforms<\/a>. And notably, they\u2019re even more supportive of allowing states to legalize marijuana without federal interference compared to the average voter.<\/p>\n The survey showed that majorities of overall voters (70 percent) and GOP voters (67 percent) back rescheduling cannabis.<\/p>\n The survey was first noted by CNN in a\u00a0report<\/a>\u00a0last month that quoted a White House spokesperson saying the administration\u00a0currently has \u201cno action\u201d planned on marijuana reform proposals<\/a>, including those like rescheduling and industry banking access that Trump endorsed on the campaign trail last year.<\/p>\n The White House has also said that marijuana rescheduling is\u00a0not a part of Trump\u2019s drug policy priorities for the first year of his second term<\/a>\u2014a disappointment for advocates and stakeholders who hoped to see him take speedier action.<\/p>\n Meanwhile, former marijuana prisoners who received clemency from Trump during his first term\u00a0staged an event outside the White House earlier this month<\/a>, expressing gratitude for the relief they were given and calling on the new administration to grant the same kind of help to others who are still behind bars for cannabis.<\/p>\n Here\u2019s the 2025 SBA guidance concerning cannabis lending eligibility:\u00a0<\/strong><\/p>\n Types of Ineligible Businesses<\/p>\n The SBA Lender must determine whether the Applicant is one of the types of businesses listed as ineligible (13 CFR \u00a7 120.110). Certain business types appearing on this list may be eligible under limited circumstances, as discussed below.<\/p>\n \u2026<\/p>\n 8. Businesses that are engaged in any activity that is illegal under federal, state, or local law are not eligible. 13 CFR \u00a7 120.110 (h)<\/p>\n a. Applicants that are engaged in illegal activity under federal, state, or local law are not eligible. This includes Applicants who make, sell, service, distribute, or promote products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the Applicant\u2019s intended market. If the business sells products made from hemp or CBD or devices associated with consuming marijuana, the SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the products sold by the business are not illegal under federal, state, or local laws.<\/p>\n b. Marijuana: Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, businesses that derive revenue from marijuana-related activities may be ineligible for SBA financial assistance. The nature of the business\u2019s specific operations determines whether a business is eligible. The following businesses are ineligible: a business that grows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity. This also includes businesses that sell smoking devices, pipes, bongs, inhalants, or other products if the products are primarily intended or designed for marijuana use or if the business markets the products for such use. This applies to recreational use and medical use even if the business is legal under local or state law where the Applicant is or will be located.<\/p>\n c. Hemp: Consistent with the Agriculture Improvement Act of 2018 (Public Law No. 115-334), a business that grows, produces, processes, distributes or sells products made from hemp is eligible only if the hemp meets the definition in section 297A of the Agricultural Marketing Act of 1946 and any applicable state definition of hemp. (It is important to note that some states define hemp as having a lower level of THC than the federal definition.) The SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the hemp meets the applicable definitions. In addition, for Applicants who will be growing, producing, and\/or processing hemp, the SBA Lender is responsible for obtaining from the Applicant documentation of the testing protocols the business will follow to ensure that the hemp and any product(s) they extract or produce from it continue to meet the applicable definitions.<\/p>\n d. Cannabidiol (CBD): The factors to be considered in determining the eligibility of CBD-related businesses include, but are not limited to, the following:<\/p>\n i. Where the CBD is derived from (whether from hemp or marijuana);<\/p>\n ii. What types of products are being produced and\/or sold (e.g., topical products or products to be ingested). Based on FDA guidance, it is illegal under the Food, Drug, & Cosmetic Act to add CBD to any food (human or animal), any dietary supplements, and certain cosmetics because cannabidiol is the active ingredient of an FDA-approved drug and has not been approved for other use. Please refer to FDA Regulation of Cannabis and Cannabis-Derived Products, Including Cannabidiol (CBD);<\/p>\n iii. What health claims, if any, are being made about the product(s); and<\/p>\n iv. Whether all products being produced and\/or sold comply with all applicable federal, state, and local laws and regulations, including those issued by the FDA.<\/p>\n v. The SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the products containing CBD being sold by the Applicant comply with all applicable federal, state, and local laws and regulations, including necessary certificates of lab analysis.<\/p>\n Here\u2019s the prior version of the guidance from 2020:<\/strong><\/p>\n Types of Ineligible Businesses<\/p>\n The SBA Lender must determine whether the Applicant is one of the types of businesses listed as ineligible in SBA regulations (13 CFR \u00a7 120.110). Certain business types appearing on this list may be eligible under limited circumstances, as discussed below.<\/p>\n \u2026<\/p>\n 8. Businesses Engaged in any Illegal Activity 13 CFR \u00a7 120.110 (h) b. Marijuana-Related Businesses:<\/p>\n i. Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.<\/p>\n ii. Whether a business is eligible is determined by the nature of the business\u2019s specific operations. The following businesses are ineligible:<\/p>\n a) \u201cDirect Marijuana Business\u201d \u2013 a business that grows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity. This applies to recreational use and medical use even if the business is legal under local or state law where the Applicant is or will be located.<\/p>\n b) \u201cIndirect Marijuana Business\u201d \u2013 a business that derived any of its gross revenue for the previous year (or, if a Start-Up Business, projects to derive any of its gross revenue for the next year) from sales to Direct Marijuana Businesses of products or services that could reasonably be determined to aid in the use, growth, enhancement or other development of marijuana. Examples of Indirect Marijuana Businesses include businesses that provide testing services, or sell or install grow lights, hydroponic or other specialized equipment, to one or more Direct Marijuana Businesses; and businesses that advise or counsel Direct Marijuana Businesses on the specific legal, financial\/accounting, policy, regulatory or other issues associated with establishing, promoting, or operating a Direct Marijuana Business. However, for purposes of illustration, SBA does not consider a plumber who fixes a sink for a Direct Marijuana Business or a tech support company that repairs a laptop for such a business to be aiding in the use, growth, enhancement, or other development of marijuana.<\/p>\n Indirect Marijuana Businesses also include businesses that sell smoking devices, pipes, bongs, inhalants, or other products if the products are primarily intended or designed for marijuana use or if the business markets the products for such use.<\/p>\n iii. Consistent with the Agriculture Improvement Act of 2018 (Public Law No. 115-334), a business that grows, produces, processes, distributes or sells products made from hemp is eligible only if the hemp meets the definition in section 297A of the Agricultural Marketing Act of 1946 and any applicable state definition of hemp. (It is important to note that some states define hemp as having a lower level of THC than the federal definition.)<\/p>\n The SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the hemp meets the applicable definitions. In addition, for Applicants who will be growing, producing, and\/or processing hemp, the SBA Lender is responsible for obtaining from the Applicant documentation of the testing protocols the business will follow to ensure that the hemp and any product(s) they extract or produce from it continue to meet the applicable definitions.<\/p>\n iv. Cannabidiol (CBD) related businesses: The factors to be considered in determining the eligibility of CBD-related businesses include, but are not limited to, the following:<\/p>\n a) Where the CBD is derived from (hemp or marijuana);<\/p>\n b) What types of products are being produced and\/or sold (e.g., topical products or products to be ingested);<\/p>\n c) What health claims, if any, are being made about the product(s); and<\/p>\n d) Whether all products being produced and\/or sold comply with all applicable federal laws and regulations, including those issued by the Food and Drug Administration.<\/p>\n Trump-Appointed U.S. Attorney Says His \u2018Instinct\u2019 Is Medical Marijuana Dispensary Shouldn\u2019t Be \u2018In The Community\u2019 As He Warns Of Federal Prosecution<\/a><\/p>\n<\/blockquote>\n\n The post Marijuana Businesses Are Ineligible For Federal Loans, SBA Clarifies In Updated Guidance Undoing \u2018Reckless\u2019 Biden Policies<\/a> appeared first on Marijuana Moment<\/a>.<\/p>\n
The federal Small Business Administration (SBA) says that, as part of its efforts to undo the Biden administration\u2019s policies on financial lending, it has updated guidance clarifying that marijuana businesses are ineligible for key loan programs. In a report about the SBA policy changes that was published on Monday, congressionalContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":458,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18,81],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/81083"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/458"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=81083"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/81083\/revisions"}],"predecessor-version":[{"id":81084,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/81083\/revisions\/81084"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=81083"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=81083"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=81083"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nRead More: Marijuana Businesses Are Ineligible For Federal Loans, SBA Clarifies In Updated Guidance Undoing \u2018Reckless\u2019 Biden Policies<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"