Colorado launches lending program for cannabis social equity companies

Colorado Gov. Jared Polis on Monday announced the launch of a new federally funded lending program for cannabis social equity companies.

The new program is designed to provide funding for licensed social participation cannabis companies that typically struggle to raise the capital needed to start and grow their businesses. The initiative is managed by the State Cannabis Business Office (CBO) within the Colorado Office of Economic Development & International Trade (OEDIT) in partnership with NuProject, a Portland, Oregon-based organization working to “build generational wealth through the legal cannabis industry for the black and brown communities disproportionately harmed by the war on drugs,” the group’s website reads.

“This landmark loan program will create and sustain 239 high-paying jobs and promote equity in the cannabis industry by providing growing businesses with access to finance,” Polis said in a statement from the governor’s office Monday afternoon. “I am committed to saving small businesses money and making sure our state remains a great place to start and run a business in any industry. Thank you NuProject for partnering with Colorado on this exciting milestone and working to support innovation in Colorado’s cannabis industry.”

Cannabis and Capital in Colorado

Cannabis companies have historically had trouble raising capital due to a variety of factors, including federal bank regulations and the ongoing stigma surrounding marijuana and cannabis users. The lack of funding can be particularly challenging for social justice business owners, who often face additional obstacles, including racism and generations of economic marginalization.

To help them meet such challenges, Colorado’s Cannabis Business Loan Program provides low-interest loans ranging from $50,000 to $150,000 to socially responsible cannabis businesses to fund renovations or expansions, equipment purchases, real estate, or for working capital.

The Office of the Governor notes that NuProject has a proven history of lending to cannabis companies and specializes in order-based and character-based lending. The nonprofit’s practices can help entrepreneurs obtain credit even if they have limited cash flow, don’t have the traditional assets needed to secure financing, or have experienced other challenges raising financing. NuProject also offers mentoring and educational resources to prepare business owners to complete loan applications.

“NuProject is committed to redirecting the typical flow of funding so small business owners in the cannabis industry, particularly those who have historically been excluded from access to capital, can access the resources they need to grow their businesses,” said Jeannette , CEO of NuProject Ward Horton. “When cannabis business owners have access to the financial backing and the know-how to leverage those funds, they can run better businesses and have the opportunity to build generational wealth through the cannabis industry.”

NuProject and the CBO will administer the Cannabis Business Loan Program as a revolving credit fund. When loans to business owners are repaid, the interest generated is reinvested in the fund to support future borrowers. The state’s initial $1 million investment is expected to lend $2.9 million over the next 10 years and create and sustain jobs in Colorado, according to state officials.

The Cannabis Business Loan Program is the third source of CBO funding available to Colorado’s licensed social equity cannabis companies and is designed to help larger, more established cannabis companies continue to grow. Introduced in 2021, the Cannabis Business Grant offers $25,000 Foundational Grants to help early-stage cannabis companies with the costs of starting their business and $50,000 Growth Grants to help existing cannabis companies expand or refine their businesses .

“Colorado’s Cannabis Business Loan Program is at the forefront of the cannabis industry, creating a new model that helps these small business owners access the resources they need to grow and thrive,” said Eve Liberman, OEDIT General Manager. “Together with NuProject, the Cannabis Business Office enables cannabis companies to grow, create new jobs and contribute to a Colorado economy that works for everyone.”

Activists are seeking more support for social justice businesses

Sarah Woodson, a cannabis social justice advocate and business owner, welcomes Colorado’s new lending program for eligible businesses in the industry. But she also wants the CBO to update the public on the success of the previous grant programs.

“It would be interesting to see what happened to the money spent so far,” Woodson told Westword. “I think a lot of these stores haven’t opened yet.”

Woodson is calling on Colorado lawmakers to pass House Bill 1020, legislation that would allow social justice cannabis companies to make shipments directly to consumers without working with a licensed dispensary. The bill has been pending with lawmakers for more than three months but has only received two hearings so far. Woodson said the bill is being delayed by opposition from the mainstream cannabis industry and a lack of funding. According to a tax note on the bill, creating the new licensing system needed to implement the legislation would cost just over $360,000.

“All we need is about $370,000 to pass our bill, but we can’t find that,” she said.

Woodson said she is preparing a public records request to learn how much previous funds were spent. If funds are still available, she wants the CBO to cover the cost of implementing House Bill 1020.

“If there’s over $2 million left, $370,000 shouldn’t be a problem,” she said. “If it’s $1 million or less, that’s a different problem.”

“The natural connection is the CBO office, but we want to be respectful of what they have planned. We just want to know how much money is left and it’s not entirely clear,” she added. “We charge less than $370,000 to keep existing companies in business, many of which were formed by the CBO. Social justice is one of the governor’s most important goals, so we must achieve it.”