Draft regulations for distributing money from the Cannabis Social Equity Trust Fund are headed back to the state Executive Office of Economic Development after a public hearing on Friday. Some social equity certified participants are hoping the money will be available sooner rather than later.
“It’s important to move on this as quickly as possible,” said Ruben Seyde, cofounder and CEO of Delivered Inc., a central Massachusetts cannabis delivery company. “A lot of us operators have been struggling for years. We need access to money.”
What is the Cannabis Social Equity Trust Fund?
The fund was established in 2022 to encourage participation in the regulated marijuana industry by entrepreneurs from communities that have been disproportionately harmed by marijuana prohibition and enforcement, according to the state website.
Discussion of regulations has been going on for a year with an advisory board weighing in. But how to determine who can apply for the fund, how much money will be awarded in loan or grant form, and what penalties there might be for defaulting are still not finalized.
The public hearing was based on the 8-page draft currently under review. The draft covers fund eligibility, the application, review and selection process, types of financial assistance and terms for loans, penalties for breach of contracts, and a host of other stipulations.
“This is a volatile industry,” Zoom meeting participant Philip Smith said during public comments. “There is no working capital out there. I’m one of the few companies able to obtain a loan but the interest is 40%.”
According to Cannabis Business Plans, a company that sells business plan templates for the cannabis and hemp industry, it can cost $750,000 to start up a cannabis shop. Because cannabis is illegal at the federal level, many banks won’t offer loans. That leaves private funding — friends, family and organizations willing to invest.
“There are banks serving the industry, but there are a lot of caveats,” said Tim McNamara, a social equity certified partner in Seaside Cannabis in Orleans. “You would essentially need to show you have a lot of assets or at least can pay back the loan if there was a default on payments. It’s a limited avenue.”
Other suggestions voiced at the public hearing were to allow private dollars and donations into the otherwise tax-funded Social Equity Trust Fund, relax regulations on selling a cannabis business, and making sure money gets into the hands of those who need it most and expedite its distribution.
Others suggested allowing a longer repayment period for loans and allowing for the possibility of default and/or options for forgiveness.
The public is invited to send any additional comments to Robert.McGovern@mass.gov. He is the deputy general counsel for the state Executive Office of Economic Development.
Denise Coffey writes about business and tourism. Contact her at dcoffey@capecodonline.com.
Thanks to our subscribers, who help make this coverage possible. If you are not a subscriber, please consider supporting quality local journalism with a Cape Cod Times subscription. Here are our subscription plans.
Recent Comments