She urged her colleagues to support a more complete version of the proposal in the near future.

Senator Sonia Chang-Díaz, who filed the measure, said the loans were vital to meet the Legislature’s own goals for the state’s cannabis industry to benefit small businesses, diverse owners, and disenfranchised communities.

State senators Wednesday rejected a proposal to create no-interest, publicly financed loans for people affected by marijuana prohibition to start legal pot businesses.

“Every month that we don’t act is a month that market share is getting claimed and eaten up” by large out-of-state companies, Chang-Díaz said. “We can’t wait forever . . . to do something more in order to accomplish our goals.”


The proposal called for a $1 million payment of public funds to start the project, which would later be financed by one-tenth of the state’s marijuana excise tax revenues and private donations.

Lawmakers took a “very strong stand” in 2017, Chang-Díaz said, in creating a legal cannabis framework to economically benefit local communities disproportionately harmed by marijuana criminalization.

But the reality, she said, is that the cannabis industry has been dominated by well-funded, large, out-of-state corporations.

Of the 19 recreational pot stores licensed so far, none involve applicants from the state’s social equity or economic empowerment programs, which are aimed at helping disenfranchised groups.

“As a policy-making body, we have not hit the mark yet,” Chang-Díaz said.

The loan program would give much-needed capital to promising entrepreneurs with strong business plans, she said. Banks aren’t lending to pot companies because of federal prohibition.

Chang-Díaz, who cochairs the joint committee on cannabis policy, acknowledged that the idea emerged “relatively late” in the development of the state’s $43 billion budget for the coming fiscal year, which starts July 1.

“It’s a new idea,” Chang-Díaz said. “I recognize it’s an idea that needs more build-out — it needs more vetting.”


The proposal first emerged in February at a Cannabis Control Commission meeting as a suggestion by Commissioner Shaleen Title, the five-member body’s social justice appointee, during a discussion about how to meet diversity and inclusion goals.

After Wednesday’s vote, Title said the loan fund proposal would be back, and she looked forward to working with lawmakers to make it a reality.

“There has always been widespread support for the commission to have the tools it needs to do its job,” Title said. “This fund would help us ensure smaller applicants aren’t structurally blocked.”

Steven Hoffman, the commission chairman, previously told the Globe he met with lawmakers to build support for the program.

Hoffman said in March that he envisioned the interest-free financing would be paid back over a five-year term, with recipients being allowed to use 20 percent of the loan to navigate the licensing process, 60 percent to build physical facilities, and the remainder for unexpected expenses. Business assets, not personal assets, would serve as collateral.

Private businesses were eager to donate to the effort, Hoffman said, adding that one bank that serves recreational operators had offered to pitch in 1 percent of the profits from its cannabis business.

Other states with legal cannabis have searched for ways to redress the longtime racially uneven enforcement of pot laws. In November, Oakland started a program to loan $100,000 interest-free to businesses owned by people affected by the war on drugs.

Naomi Martin can be reached at naomi.martin@globe.com. Follow her on Twitter @NaomiMartin.