Anyone have experience with the financing of cannabis properties?
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[{"id": "iegf88p", "text": "Anything I have seen has been cash or a shell corp that leases to the marijuana industry.", "replies": [], "depth": 1}, {"id": "iegfnab", "text": "Banks are coming around. I just had JPMorgan of all banks tell me I could put a cannabis tenant in a building we have financed with them but they wouldn't take rent checks from that tenant. I have a small regional bank that just decided they don't care at all and treat them like a normal tenant. We're in NJ where it just got legalized.", "replies": [{"id": "iegzmvz", "text": "I represent lenders in NJ - agree that they're starting to come around. Problem will be zoning. Towns don't want them so they're amending zoning codes to prohibit anywhere in town and the ordinances are always in different stages of adoption. Tough to underwrite.", "replies": [], "depth": 2}, {"id": "iejc78k", "text": "What part of NJ? Can you PM me the bank?", "replies": [], "depth": 2}], "depth": 1}, {"id": "iegh5fj", "text": "Recently asked our national lender and our national insurer if we could put a medical cannabis dispensary in a strip center in Mississippi (applications went live today for the first time).  Neither of them had a problem with it and gave us the green light.  The bank did say that they wouldn't lend the tenant money or interact with the tenant, but had no problem with landlord dealing with them.", "replies": [{"id": "ieglz3t", "text": "Got it, this one is more of a single tenant exposure and we\u2019d get new financing so I think national lenders are bit more apprehensive about that", "replies": [{"id": "iegx7hx", "text": "My recommendation would be to hop on the phone and start calling up lenders. It\u2019s good to establish those relationships early on so you know you\u2019ve got options. Can\u2019t hurt to ask.", "replies": [], "depth": 3}, {"id": "ieh2z9h", "text": "As long as you can leave a bunch of equity in the property you can find a lender but remember that when your drafting the lease because your leverage is going to be significantly less than a similar non cannabis tenant.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iegiajc", "text": "State banks /. Credit unions will do it. Some not all and they don\u2019t advertise it. You have to find them", "replies": [], "depth": 1}, {"id": "iegipuu", "text": "Assuming you are the landlord, there are a few local banks that will do it. Not sure of the options for the tenants though.", "replies": [{"id": "ieglrz6", "text": "Yes should\u2019ve stipulated we\u2019d be the landlord", "replies": [], "depth": 2}], "depth": 1}, {"id": "iegmx8g", "text": "There are brokers that deal specifically with this. I don\u2019t always get the term sheet, but I\u2019ve seen interest rates generally higher than most commercial lending.", "replies": [{"id": "ieh27ae", "text": "Very much higher (pun intended). It's almost hard money rates, terms, and fees.", "replies": [], "depth": 2}], "depth": 1}, {"id": "iegpifp", "text": "Mortgage broker here.\n\nWhere is the property located? I have several lenders in CA that will do a cannabis deal as long as it\u2019s properly licensed/insured and it\u2019s on a relatively long structured lease.", "replies": [{"id": "iegv2k7", "text": "Sent you a PM", "replies": [{"id": "iehod9s", "text": "This is what I do.  Let me know the state, zoning, license types, purchase price, cash in the deal, and history of the company.", "replies": [{"id": "ieikzv3", "text": "Sent you a PM", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iegtv1i", "text": "This is an interesting question. I'm in Hawaii where we have legal medical marijuana dispensaries, and we seem to be well on the way to legalizing recreational use. Yet the problems you describe in financing the legit side seem to persist. Would you please keep this sub posted on what you find out. At what point do the banks start to see the marijuana industry as legal and bankable? In the mean time around here it's cash, cash, and more cash.", "replies": [], "depth": 1}, {"id": "ieh3hg6", "text": "I know some one who is investing in that market rn dm me for details", "replies": [{"id": "ieh6alx", "text": "Sent you a chat.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ieh48x6", "text": "I primarily work in the cannabis industry and am well connected with a plethora of lenders, attorneys, and CPAs that work in cannabis. Depending on the borrower, you can see rates from 7-12%, the worst I\u2019ve ever seen was for equipment at 18%. If Mississippi just came online there will be plenty of people applying for financing for property, buildings, equipment, working capital, the whole shabang. Send me a PM if you\u2019d like some help.", "replies": [], "depth": 1}, {"id": "ieh8c76", "text": "I am in MS and it is legalized here.", "replies": [], "depth": 1}, {"id": "iehu3sp", "text": "You need private capital and equity partners. I have lucrative deals in CA if anyone is looking.", "replies": [], "depth": 1}, {"id": "iehytsh", "text": "From a lending perspective, the litmus test (and where state vs federal comes into play) is whether not the source of repayment involves income from an MJ business. \n\nTake an industrial property with a cannabis tenant. If you\u2019re an arms length investor, any bank \u201ccan\u201d lend to you on it. The primary source of repayment is the lease income (doesn\u2019t matter that the tenant\u2019s income is from MJ). \n\nTake the same property but say you own the MJ business, the deal is automatically a non-starter for a bank because the primary source of repayment would be from the business\u2019s MJ income. Placing the property into one entity and the business into another isn\u2019t an acceptable structure either. As an abundance of caution, banks will not lend to you on a property with an MJ tenant if you have any level of ownership in the underlying MJ business.", "replies": [{"id": "iehzxy3", "text": "Federally chartered banks cannot lend against MJ related tenants since it\u2019s not legal at the national level", "replies": [{"id": "ieizl96", "text": "Yes they can. \n\nSource: I was a lender at a federally chartered bank in a state where med &amp; rec were legal.", "replies": [{"id": "iej0yqd", "text": "Would you able to give me a reference (assuming you\u2019re no longer involved with said lender)?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "iei0xhe", "text": "I've had multiple IPM clients finance through local banks and credit unions in Missouri. Typical structure is to form a holding company and lease to the licensed company, but that's only so out of state investors can lower risks when receiving income.", "replies": [], "depth": 1}, {"id": "iei6q5d", "text": "What size loan?\nHMU", "replies": [{"id": "iei98rz", "text": "Sent you a PM", "replies": [], "depth": 2}], "depth": 1}]