If passed and signed into law, The Capital Lending and Investment for Marijuana Businesses (CLIMB) Act could be the boost the cannabis industry needs.
Cannabis businesses and consumers alike are all too familiar with the industry’s growing pains: lack of capital access, exorbitant taxation, roadblocks in obtaining banking and other standard business services plus, most recently, a sting of inflation. The bipartisan Capital Lending and Investment for Marijuana Businesses (CLIMB) Act proposes progressive legislature that could mean big changes to the cannabis industry while cutting the slack it needs right now.
Below are some of the highlights from the act that our team is most excited about and what they mean for the industry as a whole.
Highlight #1: The CLIMB Act would amend the Securities Exchange Act of 1934 to create a “safe harbor” for national securities exchanges (New York Stock Exchange, Nasdaq, and other securities market participants) to list state-legal cannabis operators.
Why It Matters: Currently cannabis companies can’t list on the U.S. exchanges so they generally trade only on the Canadian Securities Exchange or the U.S. OTC markets. OTC markets are extremely limiting in institutional support and have high volatility.
Highlight #2: The CLIMB Act would allow state-licensed marijuana businesses to deduct ordinary business expenses on their federal taxes.
Why It Matters: Currently, cannabis businesses are not able to do this because marijuana is still illegal at the federal level.
Highlight #3: The CLIMB Act would allow the cannabis industry to access a variety of “business assistance” opportunities from banking institutions such as: credit card services, money transfers, accounting services, and lending. Additionally the bill would allow government agencies to offer grants and other sources of government funding to cannabis businesses.
Why It Matters: Cannabis companies are currently restricted from receiving traditional lending and financing. “The CLIMB Act will eliminate these barriers to entry, and provide state legal American cannabis companies, including small, minority, and veteran-owned businesses, with access to the financial tools necessary for success,” said Rep. Reschenthaler via press release.
“American cannabis companies are currently restricted from receiving traditional lending and financing, making it difficult to compete with larger, global competitors,” said Rep. Reschenthaler in the same press release.
The CLIMB Act would be a major victory for the cannabis industry if passed. It would level the playing field between cannabis and other industries, and provide much-needed access to capital and banking services. This could help businesses grow and create jobs, as well as stimulate economic activity in the communities where they are located.