Bella Davis
Jonathan LeDuc stands behind the counter at Fruit of the Earth Organics with the logo for his new cannabis company Wheeed.
Cannabis microbusiness owners will soon be able to access a $5 million loan program from the New Mexico Finance Authority following approval by an interim legislative committee last week, and applicants whose communities were disproportionately impacted by prohibition or who are from rural areas will get first cracks at the cash.
But some business owners and community organizers say there’s still work to be done around social and economic equity in the growing industry. Plus, the first loans won’t be issued until March, just a month before recreational sales are set to begin, which is hampering businesses trying to get in on the ground floor.
Suggested efforts to further promote equity include funding for legal and technical assistance to help new owners apply for licenses and education programs for workers. The upcoming legislative session may present an opportunity to tackle those initiatives, and there appears to be a clear need to do so.
A majority of respondents to a survey from the Cannabis Regulatory Advisory Committee said a lack of access to capital is the biggest barrier to entry into the industry, along with a difficult licensing process and tough-to-navigate regulatory rules.
Business owners who spoke with SFR agree.
“If you don’t give these interests—who come into the marketplace with not the experience or the resources to compete—financial assistance, grants, loans, education, some sort of infrastructure and support, they’re more likely to fail than not,” says Duke Rodriguez, president and CEO of prominent cannabis company Ultra Health.
After a failed attempt in October, the New Mexico Finance Authority Oversight Committee approved the microbusiness loan program last Tuesday.
Individual loans for start-up costs are capped at $250,000 with an expected average of $100,000, and terms will be limited to five years. All licensed microbusinesses—those growing no more than 2,000 mature plants—will be eligible but if demand exceeds the available funds, priority will be given to businesses that meet yet-to-be-determined criteria for who qualifies for equity assistance programs. The state Regulation and Licensing Department has until Jan. 1 to define that criteria.
The program recognizes that while licensing for microbusinesses is less costly—with an annual fee ranging from $1,000 to $2,500 compared to $7,500 for larger vertically integrated businesses—operating costs remain burdensome.
Jonathan LeDuc is a budtender at Fruit of the Earth Organics in Santa Fe who plans to open the first dispensary in Los Alamos, called Wheeed. He thinks local investors will be a quicker avenue for funding, rather than waiting to apply to the program.
“If we had a million dollars, we’d probably already have our completed application and license but we’re a small business, so we don’t have anywhere near that kind of funding,” LeDuc tells SFR.
Wheeed applied for a production license and has received provisional approval pending a lease on a location. LeDuc likely would have applied for a loan through the NMFA program if it weren’t for the relatively slow rollout. Applications are expected to open by Feb. 1, with the first loans going out in March. Recreational cannabis sales are set to begin on April 1.
“The time frame of all this is getting really, really tough and really tight,” LeDuc says. The program timeline “seems too far out for what we’re looking at, especially if they’re expecting people to have plants by April 1.”
NMFA is working with the Cannabis Control Division “to implement this program as quickly as possible” and needs to develop the application, loan documents and monitoring protocol before it’s ready to launch, the authority’s CEO Marquita Russel tells SFR.
LeDuc and his partners have backgrounds in small business, banking and realty, and he tried unsuccessfully several years ago to obtain a medical cannabis production license. He says he was more prepared than others, so he’s been offering guidance to prospective business owners.
Many have found the licensing application process daunting and were uneducated about what exactly a microbusiness is, LeDuc says. Some even believed they would be able to run their businesses out of their homes. (They can’t.)
The Cannabis Regulatory Advisory Committee heard a similar story at its meeting last week.
The committee hired Antionette Tellez-Humble, former state director of the national Drug Policy Alliance, to guide conversations about equity with community organizers and others.
Tellez-Humble reported that participants think the state should dedicate funding—possibly tax revenue, generated from cannabis sales—for programs like culturally competent technical assistance and job training, partly as a way to repair the drug war’s myriad harms.
“Seeing how they can make that jump from being ostracized and stigmatized because of the War on Drugs and now trying to find a space in the industry seems monumental in some cases,” Tellez-Humble said. “The bottom line was if there’s no money, how is this going to happen? So there continues to be a wonder, if not a worry, that this would be an unfunded effort.”
