Pennsylvania) introduced a new bill called the Capital Lending and Investment for Marijuana Businesses Act.
If passed, the CLIMB Act could give a significant boost to a cannabis industry that is struggling … [+]
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Although The CLIMB Act won’t solve all issues in the cannabis industry, it can be a welcome wind in the sails for legal cannabis businesses if passed along with other pending legislation such as the SAFE Banking Act ( ) which addresses banking services to cannabis industry.
CLIMB Act was specifically introduced to “permit access to community, small business development, and any other public and private financial capital sources to invest in and finance cannabis-related legitimate enterprises.”
Saphira Gaob, Executive Director, National Cannabis Roundtable shares that the CLIMB Act provides state legal American companies with traditional funding and support mechanisms for an emerging industry. This is not something other domestic industries have. For entrepreneurs and small businesses, as well as minority-owned companies, the more funding options available for cannabis businesses is better.
The CLIMB Act also provides a safe harbour for national securities exchanges like the New York Stock Exchange and Nasdaq to list legal state cannabis operators. Sander Zgzebski is a corporate and securities lawyer at Clark Hill. He co-chairs its international cannabis practice group and comments that “Cannabis businesses have always struggled to access capital. The NYSE and Nasdaq won’t list cannabis companies with U.S. operation because they are still illegal at the federal level.” The U.S. Exchanges do not allow cannabis companies to list. They trade on the OTC markets in the U.S., if any, and that significantly reduces institutional support and increases volatility.
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The Climb Act is being introduced at a time when publicly traded marijuana companies are in trouble. Zagzebski points out that “publicly traded cannabis companies trade at or near all time lows.” The CLIMB Act could provide a welcome boost to the industry. It would allow qualifying companies to access U.S. exchanges and increase liquidity. This would likely give buoyancy to the whole industry, including smaller operators.
We will all be closely watching how the newly introduced CLIMB Act on Capitol Hill is received, as I and other insiders in the cannabis industry eagerly await progress at the federal level.
Clark Hill Law is my home, and I am the centre of the largest global commercial cannabis industry network.
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