SBA rules · SOP 50 10 8.1

Can an SBA loan finance a cannabis business?

Marijuana-related businesses are strictly ineligible for SBA financing, but businesses dealing in hemp or CBD may be eligible if they satisfy specific statutory, regulatory, and testing requirements.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Marijuana businesses: Any business that grows, produces, processes, distributes, or sells marijuana, marijuana products, edibles, or derivatives is ineligible regardless of the amount of activity, and this prohibition applies to both recreational and medical use even where permitted under state or local law. This ineligibility also extends to businesses selling smoking devices, pipes, bongs, or inhalants primarily intended, designed, or marketed for marijuana use.
Hemp businesses: A business that grows, produces, processes, distributes, or sells hemp products is eligible only if the hemp satisfies the definition in section 297A of the Agricultural Marketing Act of 1946 and any applicable state definition, which may mandate lower THC levels than federal law. For businesses growing, producing, or processing hemp, the lender must obtain documentation of testing protocols confirming that the hemp and any extracted products consistently meet those definitions.
CBD businesses: Eligibility for CBD-related businesses depends on whether the CBD is derived from hemp rather than marijuana, the product type, health claims made, and compliance with all laws including FDA regulations. Because FDA guidance considers it illegal to add CBD to human or animal food, dietary supplements, and certain cosmetics, lenders must obtain sufficient documentation, including certificates of lab analysis, verifying that all products comply with applicable laws.
Collateral and occupancy leasing restrictions: Real estate pledged as collateral or where the borrower operates cannot be leased to or occupied by any business engaged in or facilitating illegal activity under federal, state, or local law, explicitly including a marijuana dispensary.

The source

What the SOP says

“The following businesses are ineligible: a business that grows, produces, processes, distributes, or sells marijuana or marijuana products, edibles, or derivatives, regardless of the amount of such activity.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Marijuana: (lines 445-446)✓ Verified

“This applies to recreational use and medical use even if the business is legal under local or state law where the Applicant is or will be located.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Marijuana: (lines 445-446)✓ Verified

“Consistent with the Agriculture Improvement Act of 2018 (Public Law No. 115-334), a business that grows, produces, processes, distributes or sells products made from hemp is eligible only if the hemp meets the definition in section 297A of the Agricultural Marketing Act of 1946 and any applicable state definition of hemp.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Hemp (lines 447-447)✓ Verified

“Based on FDA guidance, it is illegal under the Food, Drug, & Cosmetic Act to add CBD to any food (human or animal), any dietary supplements, and certain cosmetics because cannabidiol is the active ingredient of an FDA-approved drug and has not been approved for other use.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Cannabidiol (CBD) (lines 448-461)✓ Verified

“The SBA Lender is responsible for obtaining from the Applicant documentation sufficient to demonstrate that the products containing CBD being sold by the Applicant comply with all applicable federal, state, and local laws and regulations, including necessary certificates of lab analysis.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Cannabidiol (CBD) (lines 448-461)✓ Verified

“During the life of the loan, the real estate pledged as collateral for the loan, or where the Borrower or Operating Company conducts its business operations, may not be leased to or occupied by any business that the Borrower or Operating Company knows is engaged in any activity that is illegal under Federal, state or local law or any activity that can reasonably be determined to support or facilitate any activity that is illegal under Federal, state or local law (such as a marijuana dispensary).

SOP 50 10 8.1, Chapter 3: Uses of Proceeds > When the real estate is owned by an EPC: (lines 834-836)✓ Verified

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