During a recent Qredible Live broadcast, Minority Cannabis Business Association (MCBA) board chair Mike Lomuto joined CEO and Chairman Brian Fitzpatrick to discuss the significant challenges federal prohibition poses to the cannabis industry's development. Their conversation revealed key insights into how federal restrictions continue to impact business growth and industry equity.

The Small Business Administration (SBA) Barrier

One of the most significant impacts of federal prohibition is the inability to access traditional business funding. Social equity licensees are particularly impacted because they cannot access SBA loans due to federal restrictions. This creates an additional barrier for those trying to enter the industry with limited capital resources. 
To address this gap, Lomuto explained he is "talking with foundations now to try to figure out how foundations can fill some of these gaps" while also working with state programs to develop alternative funding solutions.

Research and Development Limitations

Lomuto emphasized how federal restrictions create barriers to understanding cannabis products and their effects. He pointed to innovative solutions like Tetragram, a tool that helps collect data on how people interact with different cannabinoids, as ways the industry is working around these limitations. "There's lots of ways that research can be done," Lomuto explained, highlighting the need for creative approaches to gathering crucial data within current federal constraints.

Breaking Down Industry Silos

"I saw a lot of siloing happening," Lomuto shared, describing how federal prohibition creates artificial barriers between states and sectors. He noted that beyond the natural tendency for entrepreneurs to work in isolation, "you add to that the cannabis situation where we're not able to do the kind of interstate commerce that other states can." This fragmentation makes it harder for businesses to learn from each other and scale effectively.

The Path Forward: Rescheduling vs. Descheduling

Regarding solutions, Lomuto was clear: "I think one of the things we'd love to see, of course, it really only comes down to is de-scheduling." While some view de-scheduling as "pie in the sky," recent developments with the Farm Bill provide a potential framework for broader reform. "That could actually be a move that could help a lot of businesses across the board," he noted, adding that it could help bridge gaps between hemp and cannabis regulations.

Building Trust and Collaboration

Building trust between regulators and industry operators is so important. Through initiatives like the Equity Workshop Tour, Lomuto is working to create environments "where you can sit down and really have those roundtable conversations at an intimate level." These workshops help accelerate ecosystem development by bringing together businesses, advocates, leaders, and regulators in meaningful dialogue.

State-Level Innovation

Despite federal limitations, some states are finding innovative ways to support industry development. For example, Maryland's groundbreaking move to host "the first like state-sanctioned ancillary focused conference " demonstrated how states can take the initiative in building comprehensive industry ecosystems. Success requires looking beyond just licensing to create supportive infrastructure for business growth.

Creating Lasting Industry Change

Federal prohibition presents multiple challenges for cannabis industry development, but innovative solutions are emerging. Lomuto’s perspective, shaped by decades of experience, highlights the urgent need for federal reform and the importance of building collaborative, supportive ecosystems at every industry level.
"We have to be thinking about what this looks like ten years from now," he emphasized, pointing to the need for long-term thinking in addressing these challenges. While the path to reform may be complex, his work with MCBA demonstrates how focused collaboration and innovative approaches can help build a more equitable and sustainable industry.