Senator to Federal Small Business Administration: Are Federal Regulations Restricting Marijuana Industry Growth?

Senator to Federal Small Business Administration: Are Federal Regulations Restricting Marijuana Industry Growth?

Federal officials from the Small Business Administration (SBA) met with members of the Senate Small Business and Entrepreneurship Committee, and questioned how current laws related to cannabis inhibit the ability to do business in states where it is legal. The discussions come as members of Congress work on legislation that would allow small business assistance to the cannabis industry.

On May 22, Nevada Senator Jacky Rosen (D) pressed Major Clark about the challenges cannabis companies face due to federal prohibition. Clark is currently serving as the acting chief counsel of the office of advocacy at the Small Business Administration.

Rosen said that she understands that the role of the SBA is to advocate for small businesses against regulations that undercut growth opportunities, and asked how the SBA is working to support small businesses in the cannabis industry.

Clark noted that the SBA has not looked at providing advocacy or impact studies for cannabis businesses because it remains illegal federally, adding that any economic analysis on the industry from the SBA is not forthcoming.

Sen. Rosen noted that in the state of Nevada, small business owners and entrepreneurs in her state are bringing in $15 million in cannabis-related sales per month, while facing a lack of access to capital. She asked Clark, “Is growth stifled because of existing laws, regulations and appropriations riders?”

On May 16, a medical marijuana-focused rider was attached to the House appropriations spending bill. The bill, which appropriates funds for the Department of Justice for Fiscal Year 2020, includes provisions that none of the funds may be used to prevent states and certain U.S. territories “from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.” Some see this as an indication that the Democratic majority is paying close attention, drafting marijuana legislation separately as it makes its way through Congress.

Sen. James Lankford (R-OK), chair of the committee, also addressed the issue, recognizing that marijuana remains a Schedule 1 drug, and that puts federal agencies like the SBA in a difficult spot. “It is a unique challenge dealing with a Schedule I drug on the federal side and to also know that some states, including my own, have said that they want to allow it,” Lankford said, referring to the medical marijuana law that Oklahoma voters approved in 2018.

While lawmakers continue to push to get marijuana businesses access to federally authorized financial services (i.e. banking), industry advocates say that SBA-specific reform legislation may be on the horizon.

On May 23, the day after Rosen pressed Clark about SBA’s cannabis policy, Khurshid Khoja, a board member for the National Cannabis Industry Association, said at a press conference on Capitol Hill that a bill was in the works to “essentially get SBA services for cannabis businesses and for cannabis businesses from disproportionately impacted communities.”

About Brian Ellis

With 6 years' experience in business journalism, Brian is the person we turn to for anything related to the business of cannabis. His news coverage spans topics including marijuana business and finance. Brian's work features on themarijuanapages.com, marijuanareferral.com, , marijuanamerchantaccount.com and marijuanainsuranceagent.com.