![\"cannabis](\"https:\/\/www.tmcfinancing.com\/wp-content\/uploads\/2017\/12\/tmc-financing-cannabis-forecast.jpg\")
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What is going to change when cannabis becomes legal in California on January 1, 2018? To the casual observer, the biggest change may be the appearance of a few new storefronts. In reality, that is only the most obvious sign of what is sure to be a tremendous economic shift. <\/span><\/p>\n Much of this economic effect will be felt not by cannabis professionals, but by ancillary businesses that already exist and will experience a wave of new demand. While California will be faced with \u00a0rising property and rental costs and the possibility of being priced out of their leases, the cannabis industry may actually provide the stimulus for expansion. Either way, a 504 loan can help small businesses meet the new year with confidence and excitement. <\/span><\/p>\n Whose Boat Will Pot Float?<\/b><\/p>\n The rising tide raises all ships, the saying goes, and California\u2019s legalized recreational cannabis looks poised to prove that right. The adult-use cannabis business is estimated to <\/span>grow to be worth $6.4 billion by 2020<\/span><\/a>. Furthermore, Proposition 64, the ballot measure that legalized cannabis, also made it possible for people and companies from out-of-state, including large-scale growers, to participate in the California cannabis industry. These outsiders will bring new money with them into the state to spend as start-up cash.<\/span><\/p>\n The huge amount of money the cannabis industry is going to generate will flow to many recipients, even those in unexpected places. According to state calculations, state and local governments will eventually receive $1 billion annually in excise taxes, as well as income from permitting, inspection, fines and other regulatory activities. <\/span><\/p>\n Business will also benefit. The University of California Agricultural Issues Center estimated that <\/span>the cannabis industry will create 1,200 jobs<\/span><\/a> in California in 2018 alone. Some of those jobs will be industry-specific, from unskilled positions like plant trimmers to high-paid and highly trained extractors and producers of infused products. Businesses that specialize in servicing the cannabis industry, such as retailers and <\/span>commercial real estate firms <\/span><\/a>are arising too.<\/span><\/p>\n Many of the businesses that provide services to the cannabis industry are the same ones everyone else uses. A partial list of jobs the industry will require includes:<\/span><\/p>\n The cannabis industry may spur innovation in more unique and unexpected realms, like <\/span>banks<\/span><\/a> and <\/span>universities<\/span><\/a>. For example, Oakland\u2019s Oaksterdam University cannabis business training center recently celebrated its tenth anniversary, noting that it has trained 30,000 people to enter the market. <\/span><\/p>\n The Bay Area has historically contributed only a small amount to cannabis agriculture, <\/span>producing just 175,000 pounds (most of it still illegally) in 2016<\/span><\/a>. \u00a0But the City of Oakland, <\/span>motivated by economic and social factors<\/span><\/a>, is about to embrace the cannabis industry in its complete cycle, from growing to retailing. <\/span>Restrictions on sales in San Francisco<\/span><\/a> could potentially encourage retail sales in Oakland as well. Oakland is even home to two cannabis business incubators, Gateway and the Hood Incubator. All of this means that there will be a need for a broad range of jobs and local businesses to support the industry. <\/span><\/p>\n Using an SBA 504 Loan to Help Your Business Expand<\/b><\/p>\n The Small Business Administration (SBA) 504 loan is designed to encourage small business prosperity. While it is true that SBA funds cannot be used for activities that are against federal law, such as the production, distribution, processing or sale of cannabis, the vast majority of business owners who are ready to benefit tangentially from this upcoming boom can expand or upgrade their facilities and can use the program to receive long-term financing at a below-market rate.<\/span><\/p>\n Business owners can receive an SBA 504 loan to: <\/span><\/p>\n The 504 loan is administered by a <\/span>Certified Development Company (CDC)<\/span><\/a> like TMC Financing, and loans are granted in conjunction with a conventional lender. The conventional lender provides 50% or more of the project total and receives the first lien position. Your CDC facilitates the SBA loan for up to 40% of the project, or $5 million ($5.5 million if it\u2019s a manufacturing project or includes energy-efficiency measures), at a <\/span>fixed, below-market rate<\/span><\/a> over a 10- or 20-year term with no balloon payment. The borrower provides 10-15% of the project cost as a down payment.<\/span><\/p>\n [\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_round_chart type=”doughnut” stroke_width=”2″ values=”%5B%7B%22title%22%3A%2250%25%20Conventional%20borrower%22%2C%22value%22%3A%2250%22%2C%22color%22%3A%22orange%22%2C%22custom_color%22%3A%22%23b97ebb%22%7D%2C%7B%22title%22%3A%2240%25%20CDC%22%2C%22value%22%3A%2240%22%2C%22color%22%3A%22chino%22%2C%22custom_color%22%3A%22%23fe6c61%22%7D%2C%7B%22title%22%3A%2210%25%20Borrower%22%2C%22value%22%3A%2210%22%2C%22color%22%3A%22juicy-pink%22%2C%22custom_color%22%3A%22%236ab165%22%7D%5D”][\/vc_column][\/vc_row]<\/p>\n The cannabis industry will bring increased prosperity to some Oakland businesses, but it will bring increased competition as well, especially on the commercial real estate market. The influence of cannabis on commercial real estate is already being felt, and the situation will only become more complex over time. It is a crucial time for small business owners who are currently leasing space in Oakland and the surrounding areas. If you don\u2019t purchase a building for your business, you will face the threat of getting priced out of your neighborhood. <\/span><\/p>\n If you are thinking about expanding your business and would like to find out more about the 504 loan program, a 504 loan expert at <\/span>TMC Financing<\/span><\/a> would be happy to answer all of your questions and explain the loan process to you in more detail. <\/span>Contact an expert<\/span><\/a> at TMC today!<\/span><\/p>\n <\/p>\n\n","protected":false},"excerpt":{"rendered":" Much of this economic effect will be felt not by cannabis professionals, but by ancillary businesses that already exist and will experience a wave of new demand. <\/span><\/p>","protected":false},"author":19,"featured_media":7711,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[141,178],"tags":[],"class_list":["post-7710","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-education","category-sba-101"],"acf":{"related_posts":null},"yoast_head":"\n\n
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