RANTOUL, Ill.–Credit Union 1 is one of two private partners participating in a public/private program offering funding to start-up cannabis-related businesses in this state, particularly those owned by minorities.
The Illinois Department of Commerce and Economic Opportunity now has approximately $17 million, generated from cannabis sales, available for loans to license holders who qualify as “social equity” applicants, according to the Chicago Tribune. Social equity means they or a close family member had a prior low-level marijuana arrest or conviction, were from an area with high rates of poverty or cannabis arrests, or companies that have more than half their employees meet those criteria, the report explained.
Administrators expect to loan up to $500,000 to each craft grower, and $250,000 to each dispensary, agency spokesperson Lauren Huffman told the Tribune. As of Sept. 15, 18 license winners have applied for the loans, with a Sept. 30 deadline.
In addition to Credit Union 1, Good Tree Capital is also participating as a private loan partner.
The Loan Terms
According to the Tribune, in general, loans will likely have a five-year term and have an interest rate of 8% or less — “among the lowest in the nation for cannabis businesses, which can pay three times as much for operating in what’s considered a risky market,” the Tribune reported.
The state loans won’t cover all they need, but will help confer their legitimacy to other lenders, Good Tree Capital founder and CEO Seke Ballard told the Tribune.
“It really is a bunch of sharks circling these businesses, and loan sharks are a part of them,” Ballard was quoted as saying. “The comparative attractiveness of this loan program looks better and better.”
Progress is Mellow
However, there remain delays in Illinois, with new licenses delayed by more than a year because of problems with the scoring of applications and resulting lawsuits, according to the Tribune.
As CUToday.info reported here, the House has just passed National Defense Authorization Act, which includes amendments that would provide protections to financial institutions that offer services to cannabis-related businesses.