Hard Money Loans for Marijuana Banking In Colorado

In their announcement, the MBank management cited infrastructural problems as the reason for pulling out of the lucrative market. However, sources from inside the bank point to federal constraints as the real reason for the bank going back on its word. Apparently, the Federal Reserve must approve before a bank, or any other financial opens an account for any type of business. It turns out the feds aren’t such big marijuana fans.

So, What’s Next for the Cannabis Business?

Marijuana-related business activities will just have to deal with cash for the time being. Federal regulations restrict banking institutions from offering banking services to the 2,200 growing, manufacturing, and retail marijuana businesses in Colorado. The use of cash in all marijuana-related business transactions poses a big risk of spiraling the rate of violent crime within the business. But until the Federal Reserve changes its position, hard cash will just have to suffice.

Colorado Cannabis Industry Hard Money Loans

The lack of banking solutions for the Colorado cannabis industry has led to the emergence of hard cash lenders. These cash loans are privately funded and directed at investors and property owners whose properties house marijuana businesses. The status quo has led to the increase of in the value of properties (warehouses and retail stores) occupied by marijuana businesses.

Temporary Solution

Hard cash loans are just a temporary solution to the problem in Colorado. Typically, these are short term (loan term ranges between 6 months and two years) loans, but the loan term can be extended if deemed necessary. Property owners can use these loans of set up the appropriate infrastructure inside these warehouses. It just wouldn’t be possible to lease these properties to marijuana businesses without this funding.

There is still hope that the Federal Reserve will change its stance on the banking situation and when this happens, property owners will be able to refinance their hard cash loans. Right now, the Colorado cannabis industry is dependent on private funding to acquire warehouses for marijuana-related businesses.