With a deadline to open their doors this spring, minority marijuana business entrepreneurs will have an $8.25 million pool of state-backed loans.
More than 30 businesses with "social equity" licenses
More than 30 businesses with "social equity" licenses to grow, sell, process or transport cannabis and related products are eligible for up to $500,000 in funds from the state Department of Commerce and Economic Opportunity.
The executive director of the Illinois Independent Craft Growers Association is waiting to see the implementation. The process has taken a long time.
35 businesses that were waiting for word on their applications for loans under a previous loan program will be able to apply for the Cannabis Social Equity Loan program. Loan funds used for a range of key expenses, such as rent, payroll, utility bills and other costs, won't have to be repaid.
Less than a week ago, at a City Club luncheon, Vargas and other would-be minority pot entrepreneurs told the audience that as many as eight out of 10 social equity license holders would probably miss a March deadline to have their businesses up and running.
Entrepreneurs who haven't secured all necessary permits, found a permanent location, ordered inventory and purchased equipment are at risk of losing their licenses. It can cost $2 million to start a craft-growing operation.
The Illinois social equity license program, which was supposed to give opportunities in the booming legal cannabis industry
The Illinois social equity license program, which was supposed to give opportunities in the booming legal cannabis industry to minority business owners whose communities suffer most from the toll of the war on illegal drugs, has been stagnant for years as the state struggled to hold a lottery. The long delays scared off investors and ate into the start-up funds.
Pot entrepreneurs can't get bank loans because it's still illegal on the federal level. Most social equity licensees have little cash of their own for investment capital. The state's original loan program had an interest rate of 8%, but commercial banks were offering 20%.
The program allows licensees to get loans of up to $500,000.
If you want to work in the infused business, you can get up to $250,000 and if you want to work in the cannabis products business, you can get $50,000.
Each of the 37 current applicants will be eligible for additional loans from banks working with the state if the current loan pool covers the max loans. The state will offer a second round of loans for social equity license holders.
Illinois’ social equity license program, intended to steer opportunities in the booming legal cannabis industry to minority business owners whose communities suffer most from the toll of the war on illegal drugs, has been largely stalled for years as the state struggled to hold a lottery for the social equity licenses, then faced lawsuits after winners were picked. The years-long delays ate into the start-up funds for many entrepreneurs and scared off investors, Vargas said.
Because marijuana is still illegal on the federal level, pot entrepreneurs have struggled to recruit investors and access bank loans. Many social equity licensees are first-time business owners, and most have little cash of their own for investment capital, Vargas said. The state’s original loan program offered interest rates at around 8%, but commercial banks were offering rates closer to 20%, Vargas said.
Under the loan program, licensees looking to start craft growing operations are eligible for loans of up to $500,000. Licensees in the infuser business — which deals with cannabis concentrates or items that contain cannabis — can get up to $250,000, and licensees looking to work as transporters of cannabis products can get as much as $50,000.
The $8.75 million in the current loan pool should cover max loans for each of the 37 current applicants, who still will be eligible for additional loans from banks working with the state, Bolton said.
The state will offer a second round of loans for social equity license holders who intend to open cannabis dispensaries, Bolton said.
In the third quarter of the year, the Canadian cannabis operations of the U.S. company Village Farms International had a net income of 200,000 Canadian dollars.
Most of the profit in the Canadian cannabis industry has gone to the government.
The net income figure for the quarter was much lower than it was a year ago.
Village Farms CEO Michael DeGiglio said in a statement that the company achieved another sales record, outstanding growth in retail sales, and its 16th consecutive quarter of positive adjustedEBITDA.
Net sales of cannabis in Canada increased 15% in the third quarter. The company said in its earnings release that Pure Sunfarms and Rose LifeScience had the highest market share in Canada. Pure Sunfarms had the top market position for dried flower in Canada.
Village Farms' Balanced Health Botanicals had net sales of $5.1 million in the U.S., up from $3.8 million. DeGiglio said that they continue to move forward on multiple opportunities.
Sales to Australia have accelerated through this year spurred by market growth and consumer brand affinity with third-quarter sales more than tripling from the first quarter of this year. He said the company is close to beginning shipments to Germany. The shares of Village Farms are traded on the stock exchange.
A federal judge temporarily stopped New York state cannabis regulators from issuing retail licenses because of a lawsuit.There was a legal challenge brought by the owner of the Michigan-basedVariscite.
The company is challenging a provision in the law that requires retail cannabis dispensary licenses to be given to people who have been affected by drug laws in New York state.The impact regions of New York are where Variscite wanted to operate.
The affected areas are the Finger Lakes, Central New York, western New York, the Mid Hudson and Brooklyn.The Office of Cannabis Management had planned to issue the first licenses in New York by the end of the year after the first harvest.
The retail cannabis program in New York was approved with an eye towards guaranteeing justice for people who have been impacted by harsher drug laws.The initial round of operating licenses were required to be awarded to New Yorkers.We don't discuss pending litigation. The Office of Cannabis Management is committed to the Marijuana Regulation and Taxation Act's goal of including those impacted by the state's enforcement of cannabis prohibition in the market that we are building and we are also committed to getting New York's cannabis supply chain fully operational. The cannabis control board will soon have applications for a retail cannabis license, which will cause the supply chain to close.