When Lisa Capitani decided to start a small business to educate and guide medical marijuana patients, she knew she’d need some advice.
But her application was recently denied because the program is funded through a U.S. Small Business Administration grant, and marijuana use is illegal at the federal level. Capitani’s experience represents just one of many extra hurdles that often hobble cannabis-related businesses before they get started.
Cannabis-related businesses often struggle to get start-up loans. They’re denied assistance programs. They can’t take the same tax deductions as other businesses. They can’t even use Quickbooks.
These barriers tend to stem from the same issue: State legislation contradicts federal law regarding the legality of cannabis.
A national SCORE spokesperson pointed to the Small Business Administration’s 2019 policy on marijuana-related businesses in response to a request for comment from Hearst Connecticut Media Group. The policy states businesses that “derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA-funded technical assistance.”
The determination should be made on a case-by-case basis, according to the policy.
“SCORE is a resource partner of the U.S. Small Business Administration and a federal grant recipient,” the spokesperson said in an email. “As such, federal laws prevent SCORE from mentoring any client whose business is illegal or criminal.”
“It’s a stressful process, and it’s good having someone who has a medical background and can communicate with their health care providers and advocate for them,” she said.
Aaron Smith, chief executive officer of the National Cannabis Industry Association, said he hears about problems similar to Capitani’s daily. The most common problem cannabis businesses have is obtaining start-up loans, he added.
Many banks are hesitant to give a loan to a cannabis-related business, and it’s difficult for those businesses to access depository services at many banks. The Bank Secrecy Act of 1970, which aims to prevent money laundering, requires banks to submit a report to the Financial Crimes Enforcement Network if they suspect fraud, laundering or that the money came from an illegal activity.
“The problem with that is just that a lot of small businesses and…
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