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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.

Fluresh Cannabis’ Bank Loan: Moving Into the Mainstream

The announcement by Fluresh, a vertically integrated Michigan based cannabis business, of the closing of loans from a federally insured commercial bank totaling almost $50 million represents an important landmark for both Fluresh and the cannabis industry writ large. For Fluresh, perhaps as important as the bottom-line benefits of lower cost financing, the fact that its operations and financials passed muster with a substantial commercial bank can be regarded as an important rite of passage. 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.

Out of the Shadows | An Investor Summit Recap

After a COVID hiatus of more than 2 years, I rejoined the institutional cannabis investment speaker circuit, offering the closing remarks at the Kahner Global Cannabis Private Investment Summit in Coral Gables, Florida. My remarks addressed how banking developments are increasingly impacting cannabis investment, operating and financial strategies and decisions, for both plant touching and the growing array of ancillary businesses serving the industry.

BMD Announced in Best Law Firms 2022 List

We are excited to announce that BMD is included in the 2022 Edition of U.S. News – Best Lawyers “Best Law Firms,” recognized for professional excellence with consistently impressive ratings from clients and peers. The full firm report is included.

Key Takeaways from BMD’s Banking and Cannabis Webinar

Estimates have shown that the cannabis industry is one of, if not the, fastest growing industries in the United States in recent years, with no sign of slowing. Growth requires capital. Banks need loans, and cannabis companies, which are rapidly becoming bankable need access to lower cost bank lending. While cannabis remains federally illegal, an impediment to access to financial institution credit, banks and credit unions are nevertheless entering the market in increasing numbers.

American Heart Association's 2021 Go Red For Women

The BMD Season of Giving in 2020 was a great way to help out organizations that help others. Continuing community involvement in 2021, we will be looking to the American Heart Association's Go Red for Women campaign. Healthcare and Hospital Law Member and Vice President Amanda Waesch is the Chair of Go Red for Women for the American Heart Association, which is kicking off the 28 days of Heart Health. Show your support on February 5th with “Wear Red and Give” Day. Consider hosting a Jeans Day every Friday in the month of February at your place of business in support of Go Red For Women, even encouraging remote employees to participate. Snap a pic of your team members in their red gear and post on social media (socially distanced in person or a virtual group photo will work, too!) – see the toolkit here for sharing on your favorite social platforms. Click here to learn more and donate to the GRFW Campaign.