Senator Troy Singleton (D-Burlington) is advancing a bill to help minority cannabis entrepreneurs seeking to enter the medical cannabis industry access capital.
He is passionate about legalization and creating a just industry.
“The War on Drugs for low-income Black and Brown communities has done nothing but hold those communities back,” Singleton said. “It is long past time to reform cannabis law as we pass legalization.”
Singleton noted that many entrepreneurs, especially minorities entering into a new and tumultuous industry, face the challenge of obtaining funding sources from banks or private sources at a commercially reasonable rate. His bill, S. 2875, “Revises certain restrictions on ownership of medical cannabis alternative treatment centers,” would help those seeking to enter the medical cannabis industry.
“This proposal seeks to use a free-market solution to address that problem,” he noted.
The bill was designed to ensure that all members of society can benefit economically from legalization.
It was amended to address concerns that a lender with a 40 percent ownership share in 10 companies could seem like a monopoly. A lender can only own shares in a company it backs for a finite amount of time.
If a company or investment fund is interesting in investing in a medical cannabis start-up, they have to back the company for a minimum of a three-years. However, they must be divested from them within seven years.
Singleton noted that they put it in there because of thoughtful commentary that money has to be lent at a commercially reasonable rate.
Investment from third-party-lender deals has to be approved by the Cannabis Regulatory Commission (CRC), which would not approve a shady deal. While Singleton is not sure what their capacity will be to examine such deals, he noted the Department of Heath’s Medical Marijuana staff will be moved to the CRC.
The CRC will eventually have the ability to receive outside counsel to review arrangements as well. For example, they could enlist a financial analyst group to assist them.
Minority Cannabis Entrepreneur Lending Bill Prospects
The minority cannabis entrepreneur lending bill passed the State Senate on December 17th, the day the enabling and decriminalization bills passed the legislature, though their future is cloudy. It will have been a month since they passed this upcoming Sunday.
In the Senate, the lending bill was backed by Senator Shirley Turner (D-Mercer, Hunterdon) as well as Singleton. In the Assembly, the companion bill A. 5179 is sponsored by Assembly members Verlina Reynolds-Jackson (D-Mercer), Brian Bergen (R-Morris), and Jamel Holley (D-Union).
Singleton is hopeful about the bill’s prospects of advancing. He said it is likely that its strong Senate support, where it passed 32-8, will translate into passage in the Assembly.
When the minority cannabis entrepreneur lending bill was making its way through the legislature, there was not a lot of commentary for or against the bill Singleton noted. It was likely because the bill was buried under the weight of the debate on the adult-use cannabis enabling bill, which still has to be signed.