Marijuana Hard Money Lending Case Study

Marijuana Lending: Case Study

  Currently due to various federal regulations conventional banks are unable to lend on properties occupied or associated with Marijuana. Even though Marijuana is legal in Colorado (and many other states) both recreationally and medically there is a financing void. Fortunately Fairview can help and provide first mortgages on marijuana related properties (industrial buildings, retail locations, land, etc..)

Scenario:

Borrower was under contract for 1.3m in Denver for a warehouse. Borrower unable to obtain conventional financing and at the last minute another hard money lender had changed the terms on the borrower. Borrower had under 15 days to close and needed $700,000.

Deal Challenges

• Marijuana warehouse unable to obtain conventional financing
• On paper business did not look great since substantial money was reinvested for building improvements, equipment, etc…
• Borrower had to close the transaction quickly as the other lender was unable to perform
• Tax returns did not look great since they are unable to expense a number of items other than cost of goods sold

Fairview Solutions

• Fairview understands the marijuana industry and has closed a number of loans in this space on various properties throughout Colorado
• Since Fairview is privately funded, they hold and service all of their own loans and therefore not regulated like a conventional bank
• A 15 day closing was not a problem, no appraisal needed and we were able to use a prior environmental the borrower had gotten
• Fairview structured the loan as a 5 year loan with a 30 year amortization with the ability to renew the loan for nominal fee (whatever the title/attorney fees were). There was no prepayment penalty on the loan

What the Borrowers had to say:

• “Fairview was highly recommended to us by our accountant who had worked with Glen on another transaction. We had offers from various lenders but none of them understood the industry and they were unable to provide the straightforward answers and flexibility Fairview did. I would highly recommend Fairview for any Cannabis loans.”

Learn more about Hard Money Lending throughout Colorado: coloradohardmoney.com

Written by: Glen Weinberg:  COO Fairview Lending

Resources for Marijuana / Cannabis borrowers

• Marijuana Financing 101: 3 items every borrower needs to know: https://coloradohardmoney.com/blog/2014/07/marijuana-financing-101/
• Article published in the Colorado Real Estate Journal: “Are we high on Marijuana?” https://www.fairviewlending.com/blog/news/marijuana_goldrush_are-we-high/
• Loan Sharks: Get the facts on private lending https://www.fairviewlending.com/blog/news/loan-shark-get-the-facts-on-private-lending/