Colorado Gov. Jared Polis last week announced the launch of a state grant program for cannabis social equity companies, offering licensed operators a new source of capital for their businesses. The governor’s office said in a statement that the new grant program is “a bold, forward-thinking initiative to save small businesses money, foster a more equitable cannabis industry, and make it easier for Coloradans to thrive in one of the state’s fastest growing industries.”
The new grants are an initiative of the Colorado Office of Economic Development and International Trade (OEDIT) and its Cannabis Business Office. The program is designed to provide financial support to licensed cannabis social equity companies to accelerate the growth of their enterprises.
“Colorado’s nation-leading innovations in the cannabis industry are strengthening our economy, advancing diversity, and inclusion, and saving small business owners money,” Polis said last week in a statement from the governor’s office.
Catching Up on Social Equity in Colorado
When Colorado legalized recreational pot in 2012, the state’s groundbreaking cannabis reform legislation failed to adequately address decades of racial disparities in the enforcement of cannabis prohibition. Since then, social equity has become a key issue as other states draft plans to remove criminal penalties for cannabis use and legalize a regulated cannabis economy.
Colorado is now taking measures to institute social equity provisions into the state’s cannabis regulations. In 2020, the state passed legislation to pardon those with past cannabis convictions. And last March, Polis signed a bill creating the Cannabis Business Office to provide financial and technical support to businesses owned by individuals disproportionately impacted by the War on Drugs. The agency opened and began providing services to social equity applicants in July.
“The Cannabis Business Office will provide novel and ambitious programming to provide more equitable opportunity in the cannabis industry,” program manager Tristan Watkins said when the Cannabis Business Office opened last summer. “As the office expands, we are confident it will further solidify Colorado as the leader in the nation’s cannabis industry.”
A 2021 state report found that after a decade of cannabis legalization in Colorado, Blacks and Latinos were still arrested for cannabis-related offenses at a higher rate than whites, with African Americans twice as likely to face charges. Entrepreneurs of color are also underrepresented in the state’s cannabis industry and face unique challenges in raising capital to fund the costs of launching and growing a business.
“Finding funding opportunities is an ongoing challenge that cannabis entrepreneurs face in the US,” Watkins said in last week’s announcement. “The Pilot Grant is designed for early-stage and growing businesses to gain access to the capital they need to succeed — whether it’s for seed money to get started, or to help cover costs to improve their business.”
Grant Applications Now Open
The application period for the first round of grants opened on Friday for eligible social equity businesses that have been awarded or are pursuing a cannabis license from the Colorado Marijuana Enforcement Division. Qualified social equity applicants include those who have lived in a state-recognized opportunity zone for at least 15 years, people with past weed-related convictions and those in households making less than half of the median income for the state.
To be eligible for a grant, businesses are required to complete the state’s Cannabis Business Technical Assistance Program or a partner program, which teaches the fundamentals of opening a business in the regulated cannabis industry. Companies will then complete the pre-application and application processes, which include the development of a detailed proposal to outline the intended use of grant funding. Approved applications will then undergo reviewer evaluations, with selected businesses receiving notification and funding shortly thereafter.
Applicants will be divided into two groups based on business maturity. Businesses in the foundational group are eligible for grants of up to $25,000, while companies in the growth category can be awarded up to $50,000. Grant funds can be awarded for completed or upcoming projects including “brick and mortar regulatory requirements, technical and expert requirements, licensing and regulatory fees, operation needs and innovative initiatives.”
More information about Colorado’s Cannabis Business Pilot Grant program for social equity companies is available online.