HF2987

Purpose of the Bill

The bill aims to create regulations for lenders who provide loans to cannabis businesses in Minnesota. The goal is to ensure fair lending practices and protect borrowers, who are prospective or current license holders in the cannabis industry.

Main Provisions

• Definitions: The bill defines key terms such as "borrower," "lender," and "loan." Borrowers are those seeking or holding licenses in the cannabis industry, and lenders are entities making loans to these individuals, excluding regulated financial institutions.
• Fair Lending Requirement: Lenders must comply with specified fair lending standards when making loans to borrowers in the cannabis sector.
• Disclosure Requirements: Lenders must provide borrowers with a clear, written itemized list of loan disclosures at least five days before signing a loan contract. These disclosures include the loan’s interest rate, finance charges, payment schedule, total financed amount, any balloon payments, and the total payment over the loan's duration.
• Default and Cure Opportunity: Lenders must notify borrowers of any loan default and give them a reasonable opportunity to resolve the issue before enforcing contract rights.
• Language Consistency: The loan contract and disclosures must be in the same language used to negotiate the loan.
• Prohibition of False Advertising: Advertisements or solicitations for loans must not be false, misleading, or deceptive regarding loan rates, terms, or conditions.

Significant Changes

• Establishes a new legal structure under Chapter 342 for regulating lenders to cannabis-related businesses, a growing sector requiring specific financial protections due to its unique legal status.
• Introduces penalties for lenders violating the fair lending requirements, rendering any such loan void and relieving borrowers of obligations to repay.

Relevant Terms

cannabis business, lender regulations, fair lending practices, loan disclosures, borrower protection, false advertising prohibition, loan contract requirements.