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Cannabis Business Loans

This webpage provides guidance regarding agency consideration of business development projects in the space created by the recent legalization of adult use cannabis in Minnesota and the corresponding opportunities. These guidelines are meant to supplement general agency business investment policies, and are not applicable to agency grant programs.

Eligible Businesses

  • Businesses engaged in the cultivation of cannabis plants and manufacture of cannabis products.
  • Businesses located within the agency’s service area.

Ineligible Businesses

  • Businesses engaged in the retail, dispensary, transportation and real estate sectors of the cannabis industry.

Allowable Use of Agency Proceeds

  • Machinery/equipment purchases.
  • Real property or buildings if owned by a governmental entity or non-profit.

Types of Financial Assistance Available

The agency’s financing can be structured to best suit the needs of the business.

  • Bank Participation Loans
The agency purchases a portion of a loan originated by a commercial bank or other regulated lender. The interest rate on the portion of the loan purchased by the agency will be three percentage points lower than full-faith credit obligations of the U.S. government of a comparable term of the loan (with a minimum rate of 1%) and the loan is to be secured with a shared (along with lead lender) first position lien on assets financed and/or other assets.
 
  • Direct Loans
The agency provides a loan directly to the eligible business. Collateral requirements are negotiable, but will include assets to be purchased with proceeds of the loan. The interest rate on direct loans is one percentage point lower than the full-faith credit obligations of the US government of a comparable term of the loan (with a minimum rate of 3%).


Project Criteria

The purpose of agency financing is to increase, expand and diversify the region’s economy. The purpose of agency funding in the cannabis space is to create opportunity in this newly established industry for businesses located with the agency’s service area. Any business seeking assistance will be evaluated on its ability to meet the following conditions and criteria:

Business capacity

  • Equity commitment and ability to leverage funding 
  • Management capability and experience in the cannabis industry
  • Adequate collateral coverage
  • Credit-worthiness
  • Marketing plan
  • Demonstrated ability to meet minimum license criteria as outlined in Minn. Stat. § 342.14 
  • Potential impact
  • Job creation and retention
  • Economic impact
  • Deployment of innovative technology 

Application Process

  • A pre-application is required to determine eligibility of project. 
  • A full application will be provided to applicant once eligibility is determined. 
  • Initial review is completed by the agency business development representative for eligibility and application requirements.
  • Business development representative finalizes recommendations based on the completed application and presents to the Technical Advisory Committee (TAC) for review and approval.
  • Upon approval by the TAC, business development presents project to IRRR board for review and recommendation. 
  • Applicant may be required to attend board meeting for project approval and will be notified when their application is to be presented. 

Other

  • Business must have obtained all licenses to operate prior to the disbursement of any agency funds.
  • Personal loan guaranties are required of, at a minimum, all owners of at least 20% of the business.
  • Potential forgiveness of debt can be offered in cases that promise to provide a high level of economic impact, including direct job creation.  Any potential forgiveness would be subject to the business meeting benchmark criteria (tied to job creation and economic activity) and be offered solely at the discretion of the Commissioner.     

Diversity, Equity & Inclusion

  • The Department of Iron Range Resources & Rehabilitation works to improve economic opportunities in support of diversity, equity and inclusion in our service area.
  • Diverse populations served by this program include economically distressed communities, Tribal Nations, black and people of color, veterans, disabled individuals, and those that meet social equity applicant status as defined by the Office of Cannabis Management.

Public Information

  • All application information submitted is presumed to be public information pursuant to the Minnesota Data Practices Act, Minnesota Statute Chapter 13.
Conctact:  Janelle Greschner, 218-735-3029, Janelle.Greschner@state.mn.us
 

Business Assistance Pre Application (pdf)

Following approval of your Pre Application, a representative of the Business Development Team will contact you and invite you to complete the full application. Your Full Application will not be reviewed without approval of the Pre Application and the Business Development Team.     

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