In June, U.S. Rep. Troy Carter introduced The CLIMB Act to allow cannabis companies the ability to access critical lending and investment opportunities.
Carter outlined the proposed legislation, which goes beyond what the SAFE Banking Act can provide, Tuesday at Benzinga's Cannabis Capital Conference in Chicago.
"SAFE Banking is obviously a strong tool. CLIMB augments that to create yet another opportunity to create a safe harbor, if you will, for people to be able to access capital," Carter said.
The CLIMB Act: The Capital Lending and Investment for Marijuana Businesses (CLIMB) Act would allow state legal American cannabis companies, including small, minority and veteran-owned businesses, the ability to access lending and investment opportunities that are available in other regulated industries.
The CLIMB Act offers protections to financial lenders and government agencies tasked with promoting economic growth.
"Just getting an award of a license is one part of it. Being able to stand up your business and being able to fund it and move it forward is yet another," Carter said.
"Every day that goes by that people are awarded licenses but they're unable to have access to capital [or] people that are in business but are having difficulty banking or being able to keep their business stood up is another day toward what could be a collapse and we can't afford to let that happen."
Sander Zagzebski, co-chair of the cannabis industry group at Clark Hill, further detailed the legislation during the presentation on Tuesday morning.
The CLIMB Act is made up of three main pillars, he said. First, it permits public agencies to provide financial support to the cannabis industry.
"So if it were to pass, we could, for example, have the Small Business Administration supporting the cannabis industry, which would be obviously very big news," Zagzebski said.
Secondly, the CLIMB Act provides protection to service providers looking to provide services to the state legal cannabis industry, he said. Some examples include law firms, accounting firms and investment banks.
"It would make clear what historically has been a little bit of a gray area," Zagzebski said.
Lastly, the CLIMB Act would provide access to the public capital markets in the U.S., he said.
It "would remove a major barrier. It would allow the Wall Street system, you know the United States capital markets, to complement the Canadian capital markets and allow those players to provide those services to the cannabis industry. It would be a major change," Zagzebski said.
Check out more from Benzinga's Cannabis Capital Conference here:
Photo by Carlos Alvarez.
