State-legal marijuana companies could list on national stock exchanges and access key financial services under a bipartisan congressional bill that was introduced Thursday.
The CLIMB Act (Capital Lending and Investment for Marijuana Businesses) is sponsored by Representatives Troy Carter (D-LA) and Guy Reschenthaler (R-PA).
While one of the main purposes of the legislation is to free up the cannabis industry’s access to financial loans and investment opportunities, in part by providing protections to private financial institutions and government agencies that provide such services to traditional markets, one section stands out as particularly new.
It would provide a safe harbor for national securities exchanges and market participants who “have listed, listed or intend to list, or authorize trading, or facilitate the offering, listing or trading on a national securities exchange, securities of a cannabis-related legitimate business or service provider. »
It’s a verbose way of saying that cannabis companies would be allowed to list on major exchanges like the Nasdaq and the New York Stock Exchange (NYSE). This would represent a boon for the fledgling industry, legitimizing their presence on Wall Street.
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The bill more broadly states that no federal agency would be authorized to penalize any business or government authority for “receiving funds, credits, grants, contracts, or other forms of monetary or non-monetary assistance.” governmental authority, or the marketing, offering, or sale of any security, banking, insurance, or other financial services” simply because the business or individual “provides business assistance to a legitimate cannabis-related business or service provider.”
So, for example, the bill would theoretically protect an agency like the federal Small Business Administration (SBA) from being penalized by another agency (e.g. the Department of Justice) for providing its services to legal cannabis companies. ‘State. However, it contains no provision that actually requires the SBA to begin providing such services to the industry.
Due to federal prohibition, legal cannabis operators in the states do not have the same access to traditional lending and financing options as non-US businesses, creating significant barriers to entry.
The CLIMB Act would change that. Full version ⤵️ https://t.co/NdCo9nSoeu
— Congressman Troy A. Carter (@RepTroyCarter) June 23, 2022
“The bipartisan CLIMB Act is a huge opportunity to bring fairness and equal opportunity to our nation’s burgeoning cannabis industry,” Carter said in a press release. “From my work on the Small Business Committee and working directly with minority and veteran-owned small cannabis businesses, it is clear that access to capital remains one of the biggest barriers to entry and success in the industry.”
“By bringing symmetry to the business ecosystem with the CLIMB Act, we can help communities that have long been harmed by the criminalization of marijuana become leaders in business – and that’s what it’s all about. the American dream,” he said. .
Reschenthaler pointed out that “U.S. cannabis companies are currently restricted from receiving traditional loans and financing, which makes it difficult to compete with larger global competitors.”
“The CLIMB Act will eliminate these barriers to entry and provide state-legal U.S. cannabis companies, including minority and veteran-owned small businesses, with access to the financial tools necessary for success,” said the congressman. “This bipartisan legislation will stimulate the economy, create jobs and level the playing field for American businesses.”
This legislation takes a targeted approach to cannabis reform in the financial and regulatory sector, while another bipartisan bill that advocates and stakeholders are calling for – the Safe and Fair Banking (SAFE) Act – would protect more broadly financial institutions that work with marijuana businesses. to be penalized by federal regulators.
Regarding SAFE Banking, however, news broke on Thursday that a possible vehicle for reform may have reached an impasse, with congressional leaders agreeing not to retain cannabis language in a manufacturing bill. scale called America COMPETES Act.
“CLIMB provides imperative financial access to women and minority cannabis entrepreneurs,” Women Grow President Gia Morón said in a press release issued by Carter’s office. “While SAFE Banking presents a security port for cash deposits, this only fulfills an essential role in business banking. Women and minority-owned cannabis businesses continue to face a lack of access to loans, grants and investment options.
National Cannabis Industry Association CEO Aaron Smith added that the new legislation is “much-needed reform that will help level the playing field for major cannabis companies across the country.”
But Justin Strekal, founder of Better Organizing to Win Legalization, criticized the bill’s lack of provisions requiring federal agencies like the SBA to stop discriminating against cannabis companies.
“I am deeply concerned about the lack of specificity around the protections and guidelines for small businesses to access capital in this bill,” he told Marijuana Moment.
(Disclosure: Strekal supports the work of Marijuana Moment through a monthly Patreon pledge.)
“By allowing Wall Street to invest millions, if not billions, of dollars in their well-connected friends who are just entering the cannabis industry, the CLIMB Act could inadvertently be a catalyst for even further consolidation on this emerging nascent market,” he said. “It would be in stark contrast to everything activists and advocates have fought for over the decades.”
Read the text of the CLIMB law below:
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