b'Will Proposed Federal Laws Take Cannabis Lending to New Highs?by byLeslie G. Baird, Esq. T. Robert Finlay, Esq.Wright, Finlay & Zak, LLP Wright, Finlay & Zak, LLPannabis businesses are just likecredit unions providing banking servicesBanking Act is pending federal legislation most businesses out theretheyto such businesses as of December 2018. which would provide financial institutions need financing to facilitate growth.with certain safe harbors and protections if However, the cannabis industry hasAs it currently stands, a majority of statesthey choose to lend to cannabis companies. historically faced challenges associatedhave legalized the use of marijuana inThe stated purpose of the Act is to withobtainingfinancialservices,some form.However, when consideringincrease public safety by ensuring access challenges that other industries do notwhether to lend to the cannabis industry,to financial services to cannabis-related face.Notwithstanding these challenges,it is important to remember that cannabislegitimate businesses and service providers and given the current environment, theremains illegal at the federal level and isand reducing the amount of cash at such cannabis industryis hungry for financialclassified as a Schedule I drug.Given thebusinesses.The Act would protect services and making loans to businessesconflict between state and federal law,depository institutions by prohibiting in the industry could prove beneficial toand despite the increase in the numberfederal banking regulators from penalizing both the cannabis industry and lendersof financial institutions providing financialthose institutions for providing financial who choose to venture into the cannabisservices to cannabis business, most lendersservices to legitimate cannabis-related lending space. are understandably hesitant to pursuebusinesses.lending activities in the space.While the availability of financial servicesIf the Act passes and if traditional financial for cannabis businesses was limited earlierFilling this vacuum, many private lendersinstitutions opt to enter the cannabis in the decade, there has been a significanthave stepped into the cannabis space,space, cannabis businesses could suddenly uptick in the number of financial institutionslending these businesses the necessaryhave access to a wide array of financial that are engaging with cannabis business.capital to grow their businesses.If aservices that were previously unavailable. For example, by the end of June 2019, thelender can stomach the risks, lending toIncreased competition from the financial Financial Crimes Enforcement Networkthe cannabis industry can be very lucrative. institutions could also significantly reduce (FinCEN), in a Marijuana Banking Update,private moneys role in the cannabis reported that 553 banks and 162 creditLooking forward, competition for lendinglending market or, at a minimum, reduce unions were providing banking services toin the cannabis industry may significantlythe available return on investment.Only businesses related to marijuana.Compareincrease if the Secure and Fair Enforcementtime will tell!those figures with the 438 banks and 113(SAFE) Banking Act passes.The SAFEcontinued on page 18Points of InterestSpring 2020Page 17'