$8.75M in Forgivable Loans Available to Social Equity Cannabis Licensees Governor (Chicago, IL) – JB Pritzker and the Illinois Department of Commerce and Economic Opportunity (DCEO) today announced that $8.75 million in fully state-funded direct repayable loans will be made available available to all conditionally approved social loan applicants to provide immediate access to capital. Pending the completion of a streamlined documentation process, repayable loan amounts between $50,000 and $500,000 will be released immediately.
“Fairness has always been at the heart of our cannabis legalization process. That’s why we’ve removed hundreds of thousands of low-level cannabis-related charges and instituted the Cannabis Social Loan Program. But I know that if we want to create a truly equitable cannabis industry in Illinois, we need to give our business owners the resources they need to grow, both figuratively and literally,” said Governor JB Pritzker. “That’s why we’re launching this direct forgivable loan program to provide a much-needed boost to social equity applicants who have encountered barriers in seeking capital funding. This $8.75 million will help our Social Equity Licensees open their doors, a major step towards creating a thriving cannabis industry here in Illinois.
The Cannabis Social Equity The Loans Program is a one-of-a-kind program that was launched in the summer of 2021 with the aim of providing low-interest loans to social equity licensees through a partnership with lending institutions . Program participants have encountered significant delays in receiving capital through financial institutions due to the complexity of navigating a new industry that remains illegal under federal law, as well as fiduciary, regulatory and institutional underwriting standards that are set independently of the program.
In response to participant feedback and as part of an unwavering commitment to increasing fairness in the cannabis industry, DCEO’s new direct repayable loan program will make state funding available to all participants. eligible for the program, regardless of the status of their initial loan application with a lending partner. . Interested participants can continue to seek funding through the original loan program, while receiving the new direct forgivable loan.
“In Illinois, we are working to create an ecosystem for cannabis entrepreneurs that prioritizes those who have been impacted by the war on drugs,” said Lt. Governor Juliana Stratton. “The creation of the direct forgivable loan program is a critical step in this mission. We are moving forward to support the businesses of Social Equity Licensees so Illinois can thrive alongside this growing industry.
“Creating a more equitable cannabis industry in Illinois is driving the state’s loan programs and today’s announcement will accelerate our vision by making capital available to licensees immediately. equity,” said DCEO Director Sylvia I. Garcia. “Looking forward, we will continue to work closely with licensees as we implement the new direct forgivable loan program and incorporate program enhancements for future rounds of funding.”
A total of $8.75 million will be available under the new direct forgivable loan program. The following loan amounts are available per participant depending on the type of business:
- Artisanal producers: $500,000
- Infusers: $250,000
- Carriers: $50,000
New Direct Forgivable Loan Program Fully Publicly Funded offers funding to all eligible program participants upon submission of required documentation. Since DCEO has already received significant documentation from program participants, the additional documentation requirements for a direct forgivable loan are minimal to enable rapid disbursement of funds. The forgivable loan has an 18-month grace period with no payments or accrued interest to provide businesses with some flexibility.
Loan forgiveness will be granted to recipients after receiving documentation of a wide range of eligible expenses currently incurred or accrued during the loan period, including rent, payroll, utilities, inventory, debt , regulatory expenses, legal fees, equipment and more. The main differences between the programs are:
|Original program “Social Equity Loan Program”||New program “Direct Forgivable Loan Program”|
|Conditionally Approved Licensee Eligibility||Eligible, but not guaranteed to receive funding||Each participant who completes the streamlined documentation process and funding disbursement steps will receive funding.|
|Lender||Financial institutions/lending partners||state of illinois|
|Interest rate||Below market rate with no accumulation grace period||4% after an 18-month grace period with no payment required and 0% interest; plaintiffs can also request a remission before interest accrues.|
|Forgiveness options||not forgivable||The loan principal is 100% repayable upon presentation of documentation relating to eligible business expenses.|
Looking ahead: continued collaboration with licensees
Under the original lending program, social equity applicants were conditionally permitted to seek loan funding directly with lending partners. Although conditional approval does not guarantee funding through financial institutions, the program was designed to incentivize lending to social equity licensees as much as possible. As part of the structure, DCEO has committed to fund a portion of each loan, thereby assuming some of the risk and making the loans more attractive to lenders.
With many applicants still seeking loans under the original program, DCEO will continue to work closely with partners to secure loan funding for applicants who wish to complete the loan application process. . Any loan financing provided under the initial program would be in addition to the direct government-funded forgivable loan. In addition to providing additional capital, securing a loan from a financial institution can help build the legitimacy of the social equity applicant’s business model and attract capital from additional investors.
Illinois State Cannabis Program Information
The Illinois Cannabis Initiatives for Business represents a multi-agency effort. For your reference, below is a list of agencies and a summary of their roles in the cannabis space:
- Illinois Department of Agriculture:
- Issues licenses to artisanal producers, infusers and carriers
- Certify Social Equity Licensees
- Illinois Department of Financial and Professional Regulation (IDFPR)
- Issues licenses to dispensaries
- Certify Social Equity Licensees
- Illinois Department of Commerce and Economic Opportunity:
- Administers loan programs for certified social equity licensees
- Provides technical assistance to candidates through our network of partners
$8.75M in Forgivable Loans Available to Social Equity Cannabis Licensees