The New Mexico Finance Authority put forward a proposal that opens a $5 million line of credit for cannabis microbusinesses in order to promote social and economic fairness in the cannabis industry, the Associated Press reports. Under the proposal, qualifying cannabis businesses are eligible for $250,000 loans from the state with up to a five-year repayment period.
The program is targeted at small cannabis firms who grow and sell 200 plants or less, a select market created last year when New Mexico passed legislation regulating adult-use cannabis. Despite the new adult-use cannabis law mandating improvements in social equity within the emerging industry, an 11-member legislative panel voted down the Finance Authorities suggestions in a 6-5 vote.
Marquita Russel, CEO of the New Mexico Finance Authority and author of early program rules, said loans are scarce for small cannabis businesses.
“You can’t go to the Small Business Administration. There is not a space for a small business to get a loan of this sort.” — Russel to the AP
The Economic Development Revolving Loan Fund would underwrite the program and would rely on unspent dollars in the fund. Some of the money would come from money set aside for the COVID-19 emergency, the report says.
Republican state Sen. Stuart Ingle, who pointed out the lack of farming and ranching experience on the Finance Authority and insinuated loans given to cannabis farmers may be hard to recover, said, “There are still so many questions in here, where questions can’t be answered.”
We may need to slow things down,” Ingle said in the report.
According to public records, the state has received 22 cannabis microbusiness applications. In order for these entities to receive funding under the program, collateral assurances like land or equipment must be presented at the time of the application.
“We will be fully secured. These are our dollars, they need to be repaid,” Russell said. “These aren’t (loans) for people who just kind of decided this might be fun.”
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