Why Freddie Mac Won’t Allow Marijuana Financing for Real Estate Lending

cannabis financing
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The cannabis industry in the United States continues to grow at a rapid pace. While states such as Colorado, California, and Washington are the frontrunners in recreational marijuana use, other states are expected to become major players in the cannabis economy. With so many areas beginning to embrace recreational marijuana use, it’s surprising to many members of this industry that most lenders won’t finance homes for individuals involved in the cannabis business. The government-sponsored enterprise Freddie Mac is usually a great choice for first-time homebuyers, but this entity won’t lend to those in the marijuana industry. This can be frustrating for those seeking cannabis industry financing, and here, we share the reasons that most lenders aren’t yet on board.

Marijuana is Still a Federally Controlled Substance

Although many states have loosened marijuana laws or fully legalized it for recreational purposes, marijuana is still classified as a controlled substance by federal law. Therefore, employment within the cannabis industry is considered illegal activity by lenders, including Freddie Mac. Since many financial institutions are governed by federally-sponsored entities, most lenders prefer to avoid the risk of operating under conflicting state and federal guidelines. This is disappointing for many, as most employees in marijuana-related jobs in legal states benefit from a steady income and high compensation.

However, there are other options to consider. If you’re an owner or employee in the cannabis business, you don’t have to give up on your dream of homeownership. A small number of lenders provide marijuana real estate loans, and you may even qualify for as little as 3% down with Fannie Mae’s HomeReady Program. There are several appealing benefits to this program, including the release from PMI after you’ve reached 20% equity.

If you’re looking forward to exploring the possibility of home financing for employees or owners of the cannabis industry, we can help. Our team specializes in lending to individuals in this line of business, and we’re here to help you find a solution so you can achieve the milestone of homeownership. We offer financing solutions in all 50 states, so please reach out to us when you’re ready to discuss your options for cannabis financing.

Michaela Phillips

About the Author: Michaela Phillips entered the mortgage lending industry in 1994. Throughout her 20 years in the business she’s been one of the top producers for every company she’s worked for. As of late 2013, she’s the VP of Mortgage Lending for Guaranteed Rate, Inc., the 8th largest retail mortgage company in the country. Being a VP at Guaranteed Rate offers many advantages to her and her clients, unparalleled customer service, efficiency, and most importantly, competitive rates.

She 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

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