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Invitation to Banks & Family Office/Ultra-high Net Worth Investors Exploring Cannabis Lending to Join Our Informal Institutional Cannabis Lenders Community

Blog Post

This is a shout out to banks and family office/ultra-high net worth investors interested in cannabis lending to join our Informal Institutional Cannabis Lenders Community.

My Closing Remarks at the October 23 Kahner Global Investor Summit in New York City noted - as predicted in the Closing Remarks offered at the February Kahner Summit in Florida - that despite the absence of any federal enabling legislation, more and larger banks had continued to enter the cannabis lending market. The trend continues, but with a caveat that creates opportunities for community banks.

What’s Happened Since February

As reported in my blog article, Fluresh Cannabis’ Bank Loan: Moving Into the Mainstream, although the SAFE Act continued to languish in Congress, Fluresh, LLC, a vertically integrated Michigan cannabis company announced in April that it had received a commercial bank loan of almost $50 million, in what may be the largest commercial bank loan to the industry to date.

My blog led to inquiries from both large and smaller bank lenders that were running up against regulatory and house lending limits for assistance in finding bank participants, which in turn prompted the invitation to participate in an informal institutional cannabis lenders community tendered to banks and other institutional lenders - dedicated cannabis loan funds, credit unions and family office/ultra-high net worth investors - in a subsequent blog, Explosive Growth in Pot of Gold Opportunity Bank (and Other) Cannabis Lenders Driving Erosion of the Barriers.

Due to these circumstances, and the developments described below, this is driving the emergence of:
(i) a largely one off, deal by deal participation market,
(ii) a nascent syndication opportunity, and
(iii) a “politics makes strange bedfellows” coalescence of co-lending by banks with funds and, perhaps, credit unions.

Addressing these developments, we have initiated an effort to create an informal community of institutional cannabis lenders to facilitate co-lending and participations, as well as to provide an opportunity to stay abreast of rapidly evolving best practices. We have already received indications of interest from several banks, syndicators and funds, including billion-dollar-plus Chicago Atlantic. Banks, credit unions, cannabis funds and family office/ultra-high net worth lenders or investors that are in or interested in the cannabis market, and may wish to participate, should contact us directly at  

To date, the roster of participants includes a group of the largest loan funds, about a dozen commercial banks ranging in size from single state community banks to 3 of the 50 largest in the US, a syndicator of credit union loans to the industry, and a few family offices.

We hope to continue to see a steady increase in the number of participating commercial banks and will continue outreach to family office/ultra-high net worth investors. 

What’s Happening Now

In an interesting side bar, while this trend of expanding bank entry into the cannabis markets continues, some of the larger banks that have entered the lending market appear to be doing a reset and recalibration. Reports indicate that some, while having no intent to exit the market, have slowed down or curtailed their lending activities as they see how their portfolios and the industry in general perform. Notwithstanding this development, with equity continuing to be hard for the industry to find, both fund and bank lenders report increasing loan demand and lending activity.

At least partially as a consequence of the pull back of the larger bank lenders, and no doubt as a by-product of the Federal Reserve’s rate increase, some cannabis funds are currently lending at interest rates which, in some cases, range in the mid to high teens. While this trend may continue for the near term, longer term upward pressure on rates will be mitigated as more and larger banks will continue be drawn into the market, even without enabling legislation.

Looking into the Often Hazy Crystal Ball

Anecdotally, with their managements, boards and regulators are becoming more comfortable as the cannabis industry continues to move out of the shadows and into the mainstream, the entry of community banks appears to be accelerating, at least modestly. It seems almost certain that more larger banks will also find cannabis business irresistible as loan demand and appetites for deposits grow, operations of at least some of the industry players continue to improve, and public statements by President Biden provide comfort that potentially significant change is in the air at the federal level.

The pull back by the larger banks presents an opportunity for the increasing number of community banks in the market. Although many community banks can largely self-fund cannabis loans with cannabis deposits, that does not alleviate the stress that strong demand places on regulatory and house lending limits. This makes it imperative for those banks to position themselves to meet the credit needs of the industry by leveraging their capacity through participations with other institutional lenders.

Certainly, other banks will be candidates, but other banks are also competing for deposits. Accordingly, funds and family office/ultra-high net worth investors that aren’t competing for deposits may be more attractive participants for the community banks. Conversely, banks of all sizes will remain potentially attractive participants with funds since the funds don’t want deposits but can increase the attractiveness of their credit offerings through the blended, lower rates bank participations can offer.

Please contact me, Stephen Lenn, with questions or to discuss opportunities. Phone: 602.796.9647  Email: 

Steve has written a series of articles and posted blogs offering a 50,000-foot perspective on this subject dating to 2016. The following links will take you to his posts.

Community Banks: Collaboration, not isolation, is the key to protecting/ enhancing the cannabis business you pioneered

As we prepare for the plenary session of the informal institutional cannabis lenders community announced in my previous article, I am pleased to advise that participants now include 5 of the best-known dedicated loan funds; a select group of commercial banks ranging in size from single state community banks to mid-size regionals making cannabis loans into the mid-8 figures; and, a syndicator of credit union cannabis loans.

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Explosive Growth in Pot of Gold Opportunity for Bank (and Other) Cannabis Lenders Driving Erosion of the Barriers

Our original article on bank lending to the cannabis industry anticipated that the convergence of interest between banks and the cannabis industry would draw more and larger banks to the industry. Banks were awash in liquidity with limited deployment options, while bankable cannabis businesses had rapidly growing needs for more and lower cost credit. Since then, the pot of gold opportunity for banks to lend into the cannabis industry has grown exponentially due to a combination of market constraints on equity causing a dramatic shift to debt and the ever-increasing capital needs of one of the country’s fastest growing industries. At the same time, hurdles to entry of new banks are being systematically cleared as the yellow brick road to the cannabis industry’s access to the financial markets is being paved, brick by brick, by the progressively increasing number and size of banks that are now entering the market.

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