Can Cannabis Businesses Get SBA Loans? How Federal Marijuana Law Blocks Funding

What this page covers

• Why SBA loans are unavailable to cannabis businesses
• How federal marijuana status controls SBA eligibility
• What counts as a “cannabis business”
• Indirect cannabis businesses and gray areas
• What happens if you apply anyway
• Alternative funding realities for dispensaries

Why cannabis businesses are not eligible for SBA loans

The U.S. Small Business Administration is a federal agency.

SBA loans are federally backed and governed by federal law.

Under federal law, marijuana remains a Schedule I controlled substance.

Because of this classification, businesses engaged in marijuana-related activity are generally ineligible for SBA loans.

This applies even if the business is fully licensed under New York law.

State legality does not override federal eligibility rules.

What is an SBA loan?

SBA loans include programs such as:

• 7(a) loans
• 504 loans
• SBA microloans
• Disaster loans
• Export loans

These loans are either funded directly by the SBA or guaranteed by the federal government.

Federal agencies cannot fund businesses engaged in federally illegal activity.

What counts as a “cannabis business”?

Under SBA policy, ineligible businesses generally include those that:

• Grow marijuana
• Process marijuana
• Distribute marijuana
• Sell marijuana or THC products
• Derive revenue from marijuana sales

This includes retail dispensaries.

Even if fully compliant with New York’s Office of Cannabis Management, federal law still controls SBA eligibility.

What about ancillary businesses?

Some non-plant-touching businesses may still face restrictions.

Examples include:

• Businesses that derive a significant portion of revenue from marijuana clients
• Equipment suppliers tied directly to cannabis cultivation
• Businesses leasing property to marijuana operators

Eligibility can depend on how closely revenue is tied to federally illegal activity.

Operators should not assume indirect involvement guarantees eligibility.

What happens if you apply anyway?

If a cannabis business applies for an SBA loan and discloses cannabis activity:

• The loan will generally be denied
• The lender may flag the business
• Misrepresentation can create serious legal risk

Providing inaccurate information on federal loan applications can result in federal penalties.

Honesty is required.

Why federal status controls this issue

SBA programs are funded and regulated at the federal level.

Because marijuana remains illegal under the Controlled Substances Act:

• Federal funds cannot support marijuana enterprises
• Federal guarantees cannot back marijuana-related loans
• Federal agencies must follow federal drug law

Until federal marijuana status changes through legislation, SBA restrictions remain in place.

What about rescheduling or SAFE Banking?

Even if marijuana were moved to Schedule III, that alone would not automatically make cannabis businesses eligible for SBA loans.

Unless Congress amends eligibility rules or marijuana is removed from federal prohibition entirely, SBA restrictions are likely to remain.

Banking reform and SBA eligibility are separate issues.

Why this matters for dispensary operators

Dispensaries often assume:

• SBA loans are available like other retail businesses
• Disaster loans will apply after emergencies
• Pandemic-style relief programs will include cannabis

Federal status changes that analysis.

Cannabis businesses have historically been excluded from many federal support programs.

Operators must plan financing without relying on SBA-backed capital.

Key takeaway

Cannabis dispensaries are generally not eligible for SBA loans because marijuana remains illegal under federal law.

New York licensing does not change federal funding rules.

Until federal law changes, SBA-backed funding remains unavailable to plant-touching cannabis businesses.

Source material

• Small Business Act:Terms, Eligibility, and Guidance
• Controlled Substances Act
• SBA policy statements regarding marijuana-related businesses