Most states are still using outdated methods to finance their marijuana industry, the NM Attorney General’s Office says. This means that it is difficult for entrepreneurs and businesses in those states to get financing from traditional banks or investors, putting them at a disadvantage compared with other businesses. In an effort to fix this problem, on November 8th 2018 New Mexico became the first state in America where adult-use cannabis will be available publicly by issuing licenses for public equity as well as bonds.,
On Tuesday, the New Mexico Finance Authority Oversight Committee approved a new $5 million loan program aimed at assisting licensed cannabis microbusinesses in succeeding, particularly those run by members of communities disproportionately impacted by previous cannabis law enforcement or located in rural areas.
“NMFA looks forward to providing access to finance via the Cannabis Microbusiness Loan Program to enable even more New Mexicans profit from the economic possibilities afforded by adult-use cannabis legalization,” said Marquita Russel, Chief Executive Officer of the New Mexico Finance Authority. “This initiative will provide New Mexico small companies, especially those in rural and economically depressed areas, with a tool to make this sector more accessible and assist them in getting their firms off the ground.”
The Cannabis Microbusiness Loan Program will provide low-interest loans to licensed cannabis businesses that have shown technical and managerial competence but are unable to pay start-up expenses owing to their size, socioeconomic status, or demographics. Individual loans will be up to $250,000, with an estimated average loan amount of $100,000, thanks to a total investment of $5 million in the initiative. The loans will be completely collateralized and have a minimum equity requirement of 5%. Loan durations will range from two to five years, with interest rates ranging from two to three percent.
“The Cannabis Control Division has listened to and really heard concerns that it’s difficult for microbusinesses to access the capital they need to start a successful business throughout our ongoing open and transparent rulemaking process,” said Linda Trujillo, superintendent of the Regulation and Licensing Department, which houses the Cannabis Control Division. “This Administration is dedicated to establishing a robust cannabis sector that reflects New Mexico’s ideals of social equality and fairness.” We are happy for the opportunity to collaborate with the New Mexico Finance Authority on this loan program, which will allow us to fulfill our commitment to social equality in this exciting new sector.”
The Cannabis Regulation Act, which was signed into law by Gov. Michelle Lujan Grisham earlier this year, authorized the sale of adult-use cannabis in New Mexico. To promote and encourage full involvement in the cannabis business, the CRA incorporated a Social and Economic Equity mission. The bill intends to help groups that have been disproportionately damaged by cannabis prohibition enforcement, such as rural areas that are likely to be touched by cannabis cultivation, and agricultural producers from economically disadvantaged communities.
Adult-use cannabis will be available for purchase in New Mexico no later than April 1, 2022.
The Cannabis Microbusiness Loan program’s application system is planned to be ready by February 1st, and applications will be accepted and vetted on a monthly basis. The first loans should be issued in March 2022.