New Funding Opportunity for Maryland’s Social Equity Cannabis Business Applicants
By Meg Nash, Bridgette Nikisher
Feb 7, 2024
Beginning on February 19, 2024, social equity cannabis business license applicants can apply to receive funds to reimburse costs related to the completion of their cannabis business license application. Please note that applications will close on March 20, 2024. Continue reading for additional information on this unique opportunity, which is also available through the Maryland Department of Commerce.
What is the Cannabis Business Assistance Loan/Grant Fund?
The Cannabis Business Assistance Loan/Grant Fund (CBAF) is a financial resource to support social equity in the cannabis industry. CBAF provides grants and loans for small businesses, including small minority and women-owned businesses, seeking to enter the adult-use cannabis industry. Businesses that are awarded grants or loans will be able to use the funds for license application assistance, assistance with operating or capital expenses for their business to join the cannabis industry, or targeted training to assist their participation in the industry.
CBAF will also provide grants to Historically Black Colleges and Universities (HBCUs) to operate cannabis-related programs and to business development organizations to train and assist businesses seeking to participate in the adult-use cannabis industry. HBCUs that are selected will be able to use their grants to establish programs to train and assist small, minority, and women business owners seeking to enter the industry.
The current funding opportunity is the Social Equity License Application Assistance Reimbursement Grant.
Current Funding Opportunity – Social Equity License Application Assistance Reimbursement Grant
Starting February 19, social equity applicants will be able to apply for the License Application Assistance Reimbursement Grant. Part of the CBAF program, this reimbursement grant is available to qualified social equity applicants seeking to obtain assistance to cover the costs of completing a cannabis business license application. Applicants will be able to submit a free application for a reimbursable grant to fund 50% of eligible expenses up to $5,000. Please note that these grants are taxable.
Grantees will receive funds upon application approval. To ensure appropriate use of funds, grantees are subject to random audits. Applicants who do not comply with the intended purpose of the grant are subject to repayment in full.
To be eligible for a reimbursement grant, your business must:
- Be an existing business in good standing with the State of Maryland
- Have completed and submitted a Social Equity Cannabis Business License application that met the Social Equity Criteria set forth by the Office of Social Equity
- Meet the small business qualifications (may only have 0-50 employees per license)
- Meet the personal net worth qualification by being at least 51% owned by an individual or individuals whose personal net worth does not exceed $1.7 million.
- Net worth is the value of the assets of an individual remaining after total liabilities are deducted.
- Net worth includes assets held jointly or as community property with the individual’s spouse.
- Net worth does not include:
- The individuals’ ownership interest in the applicant
- The individual’s equity in the individual’s primary place or residence
- The cash value of any qualified retirement savings plans or individual retirement accounts
Qualifying expenses include out-of-pocket costs associated with completing the cannabis business license application, including attorneys, certified public accountants, financial advisors, and other providers of technical assistance.
Examples of qualifying expenses that are eligible for reimbursement include:
- Consultant or advisory fees associated with writing application narratives (the business, operational, and diversity plans)
- Corporate advice, including relating to advice on forming the business and determining its structure (e.g., LLC, partnership, s-corporation, or other type of business entity)
- Language translation costs incurred in completing the application
Examples of expenses that would not be eligible for reimbursement include:
- The time spent writing the application
- Market analysis studies
- Equipment and other capital costs
- Lease and other security deposits
- Legal retainer fees; rent and interest expense
- Working capital costs such as inventory, marketing, payroll, rent, and utilities, dividends to owner(s)
Applications for the reimbursement grant are anticipated to open on February 19, 2024, and will close on or around March 20, 2024. Eligible applicants will apply through a web-based portal provided through the Department of Commerce.
Applicants must provide:
- A list of owners meeting the personal net worth qualification and the percentage of ownership for each of those qualifying individuals
- A Statement of Personal Net Worth for all owners meeting the personal net worth qualification
- Completed W9
- Evidence of Good Standing
- Businesses can check their standing using the Maryland Business Express website.
- The application will accept a screenshot showing that the business is in good standing. A formal certificate of good standing is not required but may be provided if preferred by the applicant.
- Copies of invoices detailing services rendered and proof of payment for eligible expenses to be reimbursed.
Resources for Cannabis Businesses
- Maryland Department of Commerce Website on CBAF
- Adult-Use Cannabis Legalization
- New Cannabis License Information
Are you interested in applying for a reimbursement grant? Click here to schedule a free consult with a member of Vicente’s Maryland team for advice on navigating the application.