Social Equity
Navada Labs, LLC is a family business started by siblings who grew up in Chicago’s North Lawndale neighborhood. They believe in the power of cannabis to treat some common ailments and stimulate small business opportunities for Black and brown entrepreneurs.
After they were exposed to the health and wellness successes of cannabis for conditions like PTSD, anxiety, and cancer side effects, in 2019 they formed Navada. The moniker is a portmanteau of their grandmother (Navie) and mother’s (Ada) names, two women who inspired them to achieve personal and professional successes.
“We are very interested in giving back to communities and their members who have been devastated by the war on drugs,” explains Navada’s Ron Miller. “We will be hiring employees from all communities, especially minority communities, and we are also helping other social equity cannabis business applicants work through the process to ultimately become successful business owners.”
But starting and maintaining a small cannabis business isn’t easy for small entrepreneurs. This is something Navada has learned since winning a license to open a dispensary in Mt. Vernon, IL.
“I think we will spend between one and a half and two million dollars just to get us to the launch phase,” Miller says. “That includes the build-out, supply chain needs, professional services, security services, marketing, and rent, among other expenses.”
In addition to sheer cost, what has made Navada’s journey to a Mt. Vernon grand opening more difficult is acquiring funding, something that isn’t possible through banks because cannabis isn’t a federally regulated business. “Some credit unions are starting to approve cannabis business banking needs, which is helpful,” Miller says.
Another challenge to balancing Navada’s bottom line is the inability to deduct ordinary business expenses such as payroll, rent, utilities and other items which are typical write-offs for other kinds of small businesses. This has to do with IRS Code Section 280e which prohibits legitimate cannabis businesses from deducting normal business expenses. Making it more difficult, Miller expects to be taxed higher on Nevada’s profits while having fewer options for deductions than they would in other industries.
The Cannabis Business Association of Illinois is working closely with Illinois Senator Elgie Sims to pass Senate Bill 2196 which aims to de-couple Illinois from 280e, making it easier for small businesses like Miller’s to thrive. The urgency to pass this measure is important considering the significant growth in the Illinois cannabis industry and new licenses coming online, particularly those run by minority business owners who have received social equity licenses but struggle to access capital to get started.
Click here to learn more about 280e.
Recent Comments