Residential Marijuana Financing

[Mark Risley]

Howdy Bigger Pockets Community!

I am a real estate broker in Colorado and have had a few marijuana shop owners chat with me about financing a home purchase. Obviously conventional financing will not fly do to the federal regulations on the marijuana industry. Any ideas as far as creative financing?

Thank you!

Mark

[Jerry W.]

The problem is that there are laws on the books that allow the federal government to seize and forfeit any money from the sale of illegal drugs and to seize any property bought with proceeds from drug sales.  The reason most banks won't finance them is that if the federal government chose to seize and forfeit the property they could, and the bank would be stuck.  That being said if they fill out a financing statement that says their income is from shops selling mj that is evidence that can used to seize it.  If they lie about their source of money that is also a felony offense.  This is the problem with a state making something legal, and the feds leaving it illegal.  it is unclear what the current administration is going to do as mj is still illegal on the federal level as a schedule 1 drug.  Hopefully they will not chose to seize anything from operations that are legal under state law and where the prior administration openly said they would not enforce the federal law.  The non-enforcement was an executive branch action, not a legislative action, so Trump could undo it by simply telling the US Attorney to renew enforcement.  I do not think he will do that, but would not bet my house on it.