Purpose of the Bill

The bill is designed to establish regulations for lenders who provide financial support to cannabis businesses in Minnesota. It's aimed at ensuring fairness in lending practices and protecting the interests of borrowers involved in the cannabis industry.

Main Provisions

• Definitions: The bill specifies who qualifies as a borrower and a lender. Borrowers include prospective, current, or applying license holders under the cannabis statute. Lenders are individuals or entities offering loans to these borrowers but do not include banks or credit unions regulated by major financial institutions.
• Loans: Refers to loans for acquiring a license or resources necessary to operate a cannabis business, but does not include loans under $10,000.
• Fair Lending Requirement: Lenders must comply with specific conditions when making loans to borrowers in the cannabis industry.
• Disclosure Requirements: Lenders must provide borrowers with a written, itemized list of loan details at least five days before executing a loan contract. This includes the interest rate, finance charges, payment schedule, total amount financed, any balloon payments, and total payment amount over the loan’s duration.
• Language of Loan Contracts: Contracts and disclosures should be in the language used to negotiate the loan.
• False Advertising Prohibition: Lenders and their agents are prohibited from using false, misleading, or deceptive advertisements or solicitations related to loan terms.
• Penalties for Violations: If a lender violates these regulations, any loan made is considered void, and the borrower is not obligated to repay it.

Significant Changes to Existing Law

The proposal introduces a new section within Minnesota Statutes chapter 342, setting novel rules for how cannabis-related businesses can receive loans. These rules prohibit unfair lending practices and ensure transparency and fairness in financial dealings with cannabis businesses.

Relevant Terms

• Cannabis businesses
• License holders
• Fair lending
• Loan disclosures
• Balloon payment
• False advertising
• Void loans