Portfolio Lenders Suspend Mortgage Financing for Cannabis Owners

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The trickledown effect of U.S. Attorney General Jeff Session’s rescission of the Cole Memo continues to frustrate business owners in the cannabis industry. The Cole Memo was brought forward by the Obama administration, the gist of the memo was that the federal government would only focus certain priorities related to state-legal cannabis operations; preventing distribution to minors, preventing funds from the sale of marijuana to go to criminal enterprises, preventing violence/use of firearms in the cultivation of marijuana as well as preventing marijuana possession or use on federal property, to name a few. Basically, the memo agreed to let the individual states NOT focus “federal resources in your states on individuals whose actions are in clear and unambiguous compliance with existing laws providing for the use of marijuana.” This decision supported the voting decisions made by individual states regarding the cannabis industry even though, on a federal level, marijuana is illegal in the United States.

Prior to the rescission of the Cole Memo, the mortgage industry was continuing to add portfolio lenders that would offer loan products to owners in the cannabis industry looking to purchase residential real estate. As with Fannie Mae and Freddie Mac, portfolio lenders provide mortgages based on risk. Now that there is uncertainty as to the federal government’s involvement with the marijuana industry, portfolio lenders have suspended lending options to cannabis owners until further notice. This decision is another blow for owners that have been battling banking hurdles since cannabis was legalized in states. The irony of the situation continues to be that these owners are paying federal income tax in the tens of thousands of dollars but have limited access to banking and mortgage options that would allow them to invest in the communities where they live and work.

What is next you ask? All eyes continue to watch our current administration. Senators like Colorado’s Cory Gardner continue to push for the Department of Justice to give control of the cannabis legal issues back to the individual states. News out of Washington implies that both Democrats and Republicans support individual states calling the shots on marijuana legality. Unfortunately, until the Trump administration makes it official, owners in the cannabis industry will continue to be in limbo.

No matter your profession, the mortgage process can be very complex. It all boils down to knowing who and when to ask for help. If you’re in the market for a new home, regardless of your line of work, I would love to speak with you about your options for home ownership. Contact me at michaela@michaelaphillips.com or by phone at 303.579.5517.

About the Author: Michaela Phillips entered the mortgage lending industry in 1994.Throughout her 24 years in the business she’s been one of the top producers for every
company she’s worked for. As of 2018, she’s the VP of Mortgage Lending for Guaranteed Rate, Inc. Being a VP at Guaranteed Rate offers many advantages to her
and her clients, unparalleled customer service, efficiency, and most importantly, competitive rates.

Michaela enjoys teaching her clients the pros and cons of being a Real Estate Investor, and more so, watching them build their Real Estate “Empires,” large or small, but all successful. NMLS: 312874, Guaranteed Rate NMLS: 2611.