SBA rules · SOP 50 10 8.1

Can an SBA loan finance a hemp or CBD business?

Yes, a business that produces, processes, or sells hemp or CBD products may be eligible for 7(a) or 504 financing, provided the business and its products strictly comply with all applicable federal, state, and local laws.

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

In detail

Hemp eligibility: 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.
Hemp testing protocols: For applicants growing, producing, or processing hemp, the lender must obtain documentation of the testing protocols the business will follow to ensure the hemp and any extracted or produced products continue to meet applicable definitions.
CBD restrictions: Factors evaluated for CBD businesses include source derivation (hemp versus marijuana), product type, health claims made, and compliance with all laws. Based on FDA guidance, it is illegal under the Food, Drug, & Cosmetic Act to add CBD to any food (human or animal), dietary supplements, and certain cosmetics.
Required documentation: The lender must obtain documentation demonstrating the products are not illegal under federal, state, or local laws, including necessary certificates of lab analysis for CBD products.
Marijuana distinction: Businesses that grow, produce, process, distribute, or sell marijuana or marijuana products, edibles, or derivatives remain completely ineligible regardless of legality under state or local law.

The source

What the SOP says

“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

“In addition, for Applicants who will be growing, producing, and/or processing hemp, the SBA Lender is responsible for obtaining from the Applicant documentation of the testing protocols the business will follow to ensure that the hemp and any product(s) they extract or produce from it continue to meet the applicable definitions.

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

“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

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