Purpose of the Bill

The bill aims to establish regulations for lenders providing loans to cannabis businesses in Minnesota. This effort seeks to ensure fair lending practices and prevent exploitation of those involved in the cannabis industry.

Main Provisions

• Definitions: The bill defines critical terms such as "borrower," "lender," and "loan." Borrowers are individuals or entities applying for or holding licenses to operate cannabis businesses. Lenders are entities or individuals offering loans, excluding banks and regulated financial institutions.
• Fair Lending Requirements: Lenders must adhere to specified fair lending practices when offering loans to cannabis businesses.
• Disclosure Requirements: Lenders are mandated to provide borrowers with detailed, written disclosures at least five days before signing a loan contract. These must include the loan's interest rate, finance charges, payment schedule, total financed amount, any balloon payments, and the total payment amount over the loan’s lifespan.
• Language of Agreement: Loan contracts and related disclosures must be in the language used during negotiations.
• Prohibition on False Advertising: Lenders and third parties soliciting loans cannot use false, misleading, or deceptive advertisements regarding loan terms.
• Consequences for Violations: Loans made in violation of these regulations are considered void, and borrowers are not required to repay them.

Significant Changes to Existing Law

This bill introduces a new section in the Minnesota Statutes, chapter 342, specifically targeting fair lending practices for the cannabis industry, a niche previously unregulated in this manner.

Relevant Terms

• Cannabis business lending
• Fair lending practices
• Loan disclosures
• False advertising penalties
• Void loans