Cannabis regulators in Oakland, California have sent four of the city’s social equity licensees to collections over unpaid loans, Marijuana Business Daily reports.
The action was explained in an October 7th report shared with the Oakland Cannabis Commission — according to that report, of the city’s 59 social equity licensees, only about 60% are in compliance with the terms of their loans.
“As of August 2021, approximately 60 percent of all borrowers were in compliance, including twelve percent that have entered into loan modifications. Another thirty-four percent of borrowers were out of compliance; however, half of these borrowers were only one or two payments behind. Then seven percent of borrowers have fallen so far out of compliance and not pursued a loan modification that they have been forwarded to collections.” — Excerpt from the Cannabis Regulatory Commission report
According to Amber Senter, the CEO of Oakland-based Makr House who has dedicated years of work to Oakland’s social equity program, the loan defaults — and subsequent involvement of collections agencies — were frustrating but not unexpected.
“We can’t send our most vulnerable, impacted people into debt, and this is exactly what this is doing and exactly what we were fearful of,” Senter told MJBizDaily.
Meanwhile, a spokesperson for the city said in the report that “staff will continue to work with the Cannabis Commission and City Council on whether and how to forgive loans of cannabis equity applicants.”
The situation also demonstrates ongoing issues with the California cannabis market, where competitive licensing practices and high taxes have made the industry an enormous risk — especially for entrepreneurs without a lot of capital or investor backing.
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