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Trump Administration Quietly Blocks Cannabis Industry From Securing Federal Small Business Loans

The U.S. Small Business Administration issued a new guidance policy last month will prevent any and all business that even remotely deal with the legal weed industry from taking out federal loans.

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America's legal cannabis industry just got dealt a few new roadblocks when it comes to banking. As providers of state-legal cannabis continue to search for banking institutions willing to handle their keef-dusted cash, a new policy from the federal Small Business Administration (SBA) will make it near-impossible for any type of marijuana or marijuana-related business to obtain a government-backed loan.

According to concurrent reports from CNBC and Marijuana Moment, the SBA, which has an annual taxpayer-funded budget of over $700 million to encourage and assist the growth of small businesses, will no longer back any advance given to a company that, directly or indirectly, receives profit from cannabis sales.

Per the new administrative policy, implemented on April 3rd, there are three types of cannabis and cannabis-related endeavors that are now locked out from the federal agency's lending services — direct marijuana business, indirect marijuana businesses, and hemp businesses.

And while companies dealing directly with the cannabis plant — be it cultivators, dispensaries, or extractors — have had trouble for years securing funding from federally-backed sources, the SBA's barricade on indirect businesses has the potential to wreak havoc on the country's rapidly growing green rush.

The SBA will no longer support loans to "a business that derived any of its gross revenue for the previous year (or, if a start-up, 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 support the use, growth, enhancement, or other development of marijuana," the new regulatory guidelines state, according to Marijuana Moment. "Examples include businesses that provide testing services, or sell grow lights or hydroponic equipment, to one or more Direct Marijuana Businesses. In addition, businesses that sell smoking devices, pipes, bongs, inhalants, or other products that may be used in connection with marijuana are ineligible if the products are primarily intended or designed for such use or if the business markets the products for such use."

Under those guidelines, hardware stores, garden supply centers, construction firms, upstart scissor companies, and many, many more small businesses could all be at the risk of being denied loans because their products are purchased to help facilitate the cannabis industry. In legal weed states like Colorado and California, the new guidelines throw a wrench into the plans of countless entrepreneurs looking to cash in on the budding market without actually growing their own cannabis. Of course, head shops could always revert back to the sales model still employed in prohibition states across the country; label everything for "tobacco use only" and call all bongs "water pipes." For soil companies, though, the semantic loopholes are harder to fill if pallets of your product are regularly shipped to farms with state-legal cannabis licenses.

Hot on the heels of both Donald Trump and Attorney General Jeff Sessions' first cannabis-friendly comments in over a year, the new SBA regulations indicate that the gap between state and federal cannabis reform policies is still miles-wide.

Venture capital and private funding have always been at the heart of America's state-legal cannabis industry, with federally-backed banks and local credit unions constantly wavering on their acceptance of marijuana businesses. But under the new SBA regulations, firms on Wall Street and in Silicon Valley will have to take an even more prominent role in the green rush, stepping up where banks and federal lenders have turned a blind eye.

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