Purpose of the Bill

The bill aims to establish fair lending requirements for lenders that deal with cannabis businesses in Minnesota. It seeks to protect cannabis business operators by ensuring that loans are transparent and fairly administered.

Main Provisions

• Definitions: The bill defines key terms such as "borrower" (a prospective or current cannabis license holder) and "lender" (entities offering loans to cannabis businesses, excluding banks and regulated institutions).

• Fair Lending Requirements:

  • Lenders are prohibited from making loans that do not comply with the requirements set forth in the bill.
  • Lenders must provide specific financial disclosures before a loan contract is executed, detailing interest rates, finance charges, payment schedules, and the overall loan cost.

• Disclosures and Notices:

  • Lenders must deliver disclosures to borrowers at least five days before executing a loan contract.
  • Any notice of default or opportunity to cure must be provided before exercising enforcement rights under a loan contract.
  • All contracts and disclosures must be in the language used during transaction negotiations.

• Prohibition on False Advertising:

  • Lenders or persons soliciting loans cannot use false or misleading advertisements regarding loan terms or conditions.

• Consequences of Violations: Loans made in violation of these regulations are void, freeing borrowers from any obligation to repay the loan.

Significant Changes

This bill introduces comprehensive regulations specifically targeting the lending practices in the cannabis industry, which previously did not include such detailed fair lending requirements. The law aims to enhance transparency and fairness in financial dealings within this emerging sector.

Relevant Terms

• Cannabis businesses
• Lender and borrower
• Loan contract
• Disclosures
• Default notices