CLIMB Act Aims to Boost Cannabis Industry Funding and Access to Capital

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Today, Representative Troy A. Carter, Sr., a Democrat from Louisiana, and Representative Guy Reschenthaler, a Republican from Pennsylvania, introduced a new bill called Marijuana Business Capital Loans and Investments Act (CLIMB). If passed and signed into law, the CLIMB Act could provide a significant boost to a cannabis industry that is currently struggling with growing pains, lack of access to capital, difficulty obtaining banking services and other standard commercial services, high taxes and a consumer base feeling the sting of inflation and the potential for an impending recession.

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Although the CLIMB Act will not solve all of the problems facing the cannabis industry, if passed, along with other pending legislation like the SAFE Banking Act (which deals with banking services for the cannabis), it could prove to be a welcome gust of wind in the sails of legal cannabis businesses.

The CLIMB Act was expressly introduced “to provide access to community development, small business, minority development, and any other source of public or private financial capital for the investment and financing of legitimate cannabis-related businesses. “. The bill begins by providing a safe harbor to encourage this activity.

Saphira Galoob, Executive Director of the National Cannabis Roundtable, shares, “The CLIMB Act is critical because it provides US state-owned legal enterprises with traditional funding and support mechanisms for this emerging industry, which currently benefit from other national industries. The more funding sources available to cannabis businesses, the better, especially for entrepreneurs, small businesses, and minority-owned businesses that might otherwise struggle to access capital.

Additionally, the CLIMB Act provides a safe harbor for national securities exchanges, such as the New York Stock Exchange, Nasdaq, and other securities market participants, to list state-legal cannabis operators that do not cannot currently be listed in the United States. Sander Zagzebski, corporate and securities lawyer at Clark Hill and co-chairman of its International Cannabis Practice Group, comments: “Cannabis companies have always struggled to access capital, and the NYSE and Nasdaq do not. Cannabis companies with operations in the United States will not be listed because such operations continue to be illegal at the federal level. Because cannabis companies cannot list on US exchanges, they generally list on the Canadian Securities Exchange and only trade on OTC markets in the US, if at all, which limits institutional support considerably and contributes to increased volatility.

The Climb Act comes at a time when publicly traded cannabis companies are seeing red. Zagzebski notes, “Publicly listed cannabis companies are trading at or near historic lows. Thus, the CLIMB Act, if passed, could be a welcome boost for the entire industry, as it would provide access to US stock exchanges for eligible companies, significantly increase liquidity for institutional investors and likely provide dynamism to the entire industry. industry, even small operators.

While I and other cannabis industry insiders eagerly await progress at the federal level, particularly through the pending SAFE Banking Act, we will all be paying close attention to how this new CLIMB law will be received on Capitol Hill.

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