{"id":2694,"date":"2021-11-29T12:26:53","date_gmt":"2021-11-29T12:26:53","guid":{"rendered":"http:\/\/CBMiZ2h0dHBzOi8vd3d3LmN0aW5zaWRlci5jb20vYnVzaW5lc3MvYXJ0aWNsZS9GZWRlcmFsLWxhdy1wb3Nlcy1jaGFsbGVuZ2VzLXRvLW5ldy1DVC1jYW5uYWJpcy0xNjY1OTIxNC5waHDSAQA"},"modified":"2021-11-29T12:26:53","modified_gmt":"2021-11-29T12:26:53","slug":"federal-law-poses-challenges-to-new-ct-cannabis-businesses-ct-insider","status":"publish","type":"post","link":"https:\/\/thcinct.com\/?p=2694","title":{"rendered":"Federal law poses challenges to new CT cannabis businesses – CT Insider"},"content":{"rendered":"
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When Lisa Capitani decided to start a small business to educate and guide medical marijuana patients, she knew she\u2019d need some advice.<\/p>\n

So Capitani, a nurse who lives in Newtown, turned to other nurses across the country who have cannabis-related businesses. And she applied for a mentor through SCORE<\/a>, a nonprofit that provides free mentorship and advice to people looking to launch businesses.<\/p>\n

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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\u2019s experience represents just one of many extra hurdles that often hobble cannabis-related businesses before they get started.<\/p>\n

Cannabis-related businesses often struggle to get start-up loans. They\u2019re denied assistance programs. They can\u2019t take the same tax deductions as other businesses. They can\u2019t even use Quickbooks.<\/p>\n

These barriers tend to stem from the same issue: State legislation contradicts federal law regarding the legality of cannabis.<\/p>\n

\u201cThere’s enough challenges with trying to get into this new semi-regulated cluster mess of a business that it would be helpful if the state offered some kind of access, some kind of access to the kinds of services other businesses have access to,\u201d Capitani said.<\/p>\n

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A national SCORE spokesperson pointed to the Small Business Administration\u2019s 2019 policy on marijuana-related businesses in response to a request for comment from Hearst Connecticut Media Group. The policy states businesses that \u201cderive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA-funded technical assistance.\u201d<\/p>\n

The determination should be made on a case-by-case basis, according to the policy.<\/p>\n

\u201cSCORE is a resource partner of the U.S. Small Business Administration and a federal grant recipient,\u201d the spokesperson said in an email. \u201cAs such, federal laws prevent SCORE from mentoring any client whose business is illegal or criminal.\u201d<\/p>\n

Capitani\u2019s goal with the business is to counsel and educate patients as they navigate the process of starting to take medical marijuana. She\u2019s a patient herself. Cannabis has helped with her chronic pain, and she walked her brother through the process when he started it to soften some of the side effects of his cancer treatments.<\/p>\n

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\u201cIt\u2019s a stressful process, and it\u2019s good having someone who has a medical background and can communicate with their health care providers and advocate for them,\u201d she said.<\/p>\n

Aaron Smith, chief executive officer of the National Cannabis Industry Association, said he hears about problems similar to Capitani\u2019s daily. The most common problem cannabis businesses have is obtaining start-up loans, he added.<\/p>\n

Many banks are hesitant to give a loan to a cannabis-related business, and it\u2019s 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.<\/p>\n

This typically leaves cannabis-related businesses turning to private loans or personal capital to start their business, Smith said.<\/p>\n

\u201cThe problem with that is just that a lot of small businesses and entrepreneurs don’t have access to private capital,\u201d he said. \u201cEspecially communities of color and other disadvantaged communities.\u201d<\/p>\n

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Connecticut has taken steps to ensure communities most impacted by the war on drugs are represented in the emerging adult-use program<\/a>, including requiring half of licensees be \u201csocial equity applicants\u201d and establishing a program for mentorship and partnership between social equity and other licensees.<\/p>\n

The state also plans to have a fund for loans available to social equity applicants.<\/p>\n

However, this doesn\u2019t include cannabis-related businesses, like Capitani\u2019s, that don\u2019t sell or produce marijuana.<\/p>\n

The federal tax code also doesn\u2019t allow marijuana businesses to take tax deductions for normal business expenses such as marketing, wages or security costs. The cost of goods can be deducted, however, according to the Internal Revenue Service\u2019s<\/a> website.<\/p>\n