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Another Big Move Out of the Shadows; First Citizens Bank, the nation’s 19th largest, poised to enter the Cannabis Market

Blog Post

A commentary on cannabis and hemp dated January 12, 2024, posted by First Citizens Bank on its website, reflects the decision by the Bank to extend its very substantial hemp/CBD platform into the cannabis space.

With more than $200 billion in assets after its acquisition of assets of Silicon Valley Bank, First Citizens is the largest bank that I’m aware of that is now serving the cannabis industry (if anyone knows differently, please let me know).The entry of a bank this size into the cannabis market is a very significant development for the cannabis industry in and of itself and substantiates the belief reflected in several of my earlier blogs and at numerous conferences at which I have been a presenter, that whether or not there was any enabling federal action more and larger banks would be drawn into the cannabis markets as the dollars increased and the industry moved further and further out of the shadows and into the mainstream. Perhaps, as importantly, if my thesis continues to prove correct, it will pave the way for and draw into the market other comparably large banks (as well as more smaller banks), a trend anticipated in those blogs and remarks. 

Blogs posted in 2022 about a $48 million commercial bank loan to Fluresh, and almost exactly a year ago about Valley National Banks’ $71.5 million loan to Trulieve, noted: 

“For the industry, it reflects its inexorable movement out of the shadows and into the mainstream. This substantiates the view that, whether or not any of pending the federal legislation is enacted, bank lending to the cannabis industry will continue to accelerate.

While a number of mega banks are stubborn holdouts, and whether or not there is a formal change in bank law or regulation, this transaction is further evidence supporting the belief that more and larger banks are entering and will continue to enter the market. Each one that does both paves the way for and draws others in.

Of equal, or perhaps greater significance to the industry than the direct impact on increased access and cheaper money on the operating results, are the intangible, “out of the shadows” implications of these trends in the ongoing process of propelling it “into the mainstream,” the potential significance of which likely extends far beyond banking.”

Could First Citizens represent a beachhead among the tier just below the mega banks that have been stubborn holdouts? It is almost certain that there are others, still cloaked in the shadows, that are taking note of First Citizens initiative and could be motivated by it to act on what is probably still an “early movers” opportunity.

First Citizens is the most recent and largest addition to the membership of the ICLC (Institutional Cannabis Lenders Community), a non-profit trade association which was organized last March among various institutional participants in cannabis credit markets. Its membership includes four major funds (Altmore, Chicago Atlantic, Rainbow Realty and Silver Spike), a cross section of geographically dispersed banks and credit unions (ranging in size from single state community institutions to First Citizens and another top 50 bank), and an eclectic group of family office advisers, investors and advisers involved or interested in cannabis opportunities. In addition to providing access to shared resources and opportunities, the ICLC has a focus on programming for its participants on key issues and emerging best practices. Its membership remains open to qualifying participants.

Welcome First Citizens! And to those other banks, come on in, the water’s fine.

Entourage Effect and Shield Compliance Join the ICLC

In a continuation of its recent growth, only a bit more than a year after its organization, the ICLC is pleased to announce the addition of 3 more new participants. One of these is a commercial bank. In accordance with our commitment to our bank participants, they are not identified outside the Community unless they specifically authorize it. The other 2, Entourage Effect Capital (EEC) and Shield Compliance, are each well known within the cannabis industry and will enhance the ICLC’s potential value to its participants, enriching the spectrum of relevant and accretive cannabis industry experience, skillsets and perspectives available to them.

Trulieve Tax Announcement and the ICLC Growth Spurt

On March 12, leading cannabis tax lawyer James Mann made an extremely timely virtual presentation to ICLC participants regarding the announcement by Trulieve of its receipt of more than $100 million of tax refunds in connection with a challenge to what it owes under Section 280E of the Internal Revenue Code.

A Closer Look at Cannabis

At the Nov. 30 Akron Roundtable event "A Closer Look at Cannabis," moderated by Andrew Meyer, deputy editor of news Ideastream Public Media, a varied group of panelists spoke about expected and potential outcomes and efforts of marijuana legalization.

Out of the Shadows - Cannabis Going Mainstream

BMD Phoenix Office Managing Partner, Stephen Lenn, recently discussed today's cannabis industry at an Akron Roundtable as part of their "Bringing it Home" series.

Institutional Cannabis Lenders Community Holds First Meeting

BMD Attorneys Stephen Lenn and Brandon Pauley have organized the Institutional Cannabis Lenders Community (ICLC), which is a community of institutional lenders include banks, credit unions, dedicated cannabis loan funds and family office/ultra-high net worth investors and are excited to announce that the group recently held its first meeting. The more than 20 participants in the ICLC, which was organized to enhance relationships among institutional cannabis lenders and provide forums for evolving best practices, include 4 of the major cannabis loan, more than a dozen banks and credit unions, and a cross section of other organizations that are involved in institutional cannabis finance activities.