Cannabis Industry Startup Financing (CanStartup)

Overview

DEED provides grant funds to a network of nonprofit lenders which use these funds to make loans to cannabis microbusinesses throughout the state. 

Businesses must apply directly with a partner lender. Each partner lender has authority to determine the loan terms such as interest rate and collateral requirements. However, the interest rate may not exceed the Wall Street Journal prime rate. Once the lender approves the loan, they will forward the loan package to DEED for approval by the commissioner and disbursement of funds for the project.

DEED’s financial support ranges from $2,500 to $75,000 without private matching funds and up to $200,000 with private matching funds. Priority will be given to business owned by individuals who are eligible social equity applicants. Eligibility as a social equity applicant is determined by the Office of Cannabis Management through the social equity verification process.

For additional information

For questions or additional information email canstartup.deed@state.mn.us.

Read the statute establishing and governing the program.

Lender Directory

The approved nonprofit lenders serve different communities and areas of the state.  They may have additional limitations, including loan size available and lending requirements.

Approved List of Nonprofit Lenders

1. Propagate Community Development Corporation: Trish DeAnda, tdeanda@propcdc.org, 612-666-0144, 3137 Chicago Avenue Minneapolis, MN
2. WomenVenture: 165 Western Avenue North Suite 8, Office #100 St. Paul, MN, 612-224-9540

For additional information: 

For questions or additional information email canstartup.deed@state.mn.us.

FAQs

Who qualifies a company to receive a loan from the program?

• The program requires the company to be a new Minnesota-based cannabis microbusiness. Priority must be given to loans to businesses owned by individuals who are eligible to be social equity applicants and businesses located in communities where long-term residents are eligible to be social equity applicants.  Loan must be made to cannabis microbusinesses that are not likely to undertake the project for which loans are sought without assistance from the program.

What are the minimum and maximum loan amounts?

• The minimum state contribution to a loan is $2,500 and the maximum is either $75,000 or $200,000 if state contributions are matched by equal or greater amount of new private investment.

What is the interest rate of loans under the program?

• The nonprofit lender will set the terms of the loan, including the interest rate. The rate for loans under the program may not exceed the Wall Street prime rate.

Does each nonprofit lender have unique criteria for deciding whether to make a loan through the program?

• Yes. Each nonprofit lender will have its own criteria and guidelines for considering and approving a loan that is funded by the program.

What counts as a new cannabis microbusiness?

• Business needs to be located in Minnesota and in existence 3 years or less. Business must be classified and licensed as a cannabis microbusiness.
• A cannabis microbusiness license allows the licensee to grow, produce concentrate, manufacture artificially derived cannabinoids, and producing other cannabis or hemp products.  A microbusiness can also purchase plants, seeds, and flower, and sell cannabis and hemp products to other licensed businesses and directly to customers.
• In addition to growing, processing, and dispensing cannabis products, the microbusiness can operate an establishment that permits on-site consumption of edible cannabis products and lower-potency hemp edibles. 

What are reporting requirements for a nonprofit corporation that receives a grant?

• An annual report to the commissioner is due by February 15 of each year that includes:
  1. The number of businesses to which a loan was made;
  2. A description of businesses supported by the program, at a minimum the legal entity;
  3. An account of loans made during the calendar year;
  4. The program's impact on business creation and job creation, particularly in communities where long-term residents are eligible to be social equity applicants;
  5. The source and amount of money collected and distributed by the program;
  6. The program's assets and liabilities;
  7. An explanation of administrative expenses;
  8. Demographic information, as specified by the commissioner, regarding each borrower and;
  9. An independent annual audit to be performed in accordance with generally accepted accounting practices and auditing standards.