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A commentary on cannabis and hemp dated January 12, 2024, posted by First Citizens Bank on its website, reflects the decision by the Bank to extend its very substantial hemp/CBD platform into the cannabis space.

With more than $200 billion in assets after its acquisition of assets of Silicon Valley Bank, First Citizens is the largest bank that I’m aware of that is now serving the cannabis industry (if anyone knows differently, please let me know).The entry of a bank this size into the cannabis market is a very significant development for the cannabis industry in and of itself and substantiates the belief reflected in several of my earlier blogs and at numerous conferences at which I have been a presenter, that whether or not there was any enabling federal action more and larger banks would be drawn into the cannabis markets as the dollars increased and the industry moved further and further out of the shadows and into the mainstream. Perhaps, as importantly, if my thesis continues to prove correct, it will pave the way for and draw into the market other comparably large banks (as well as more smaller banks), a trend anticipated in those blogs and remarks. 

Blogs posted in 2022 about a $48 million commercial bank loan to Fluresh, and almost exactly a year ago about Valley National Banks’ $71.5 million loan to Trulieve, noted: 

“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.

While a number of mega banks are stubborn holdouts, and whether or not there is a formal change in bank law or regulation, this transaction is further evidence supporting the belief that more and larger banks are entering and will continue to enter the market. Each one that does both paves the way for and draws others in.

Of equal, or perhaps greater significance to the industry than the direct impact on increased access and cheaper money on the operating results, are the intangible, “out of the shadows” implications of these trends in the ongoing process of propelling it “into the mainstream,” the potential significance of which likely extends far beyond banking.”

Could First Citizens represent a beachhead among the tier just below the mega banks that have been stubborn holdouts? It is almost certain that there are others, still cloaked in the shadows, that are taking note of First Citizens initiative and could be motivated by it to act on what is probably still an “early movers” opportunity.

First Citizens is the most recent and largest addition to the membership of the ICLC (Institutional Cannabis Lenders Community), a non-profit trade association which was organized last March among various institutional participants in cannabis credit markets. Its membership includes four major funds (Altmore, Chicago Atlantic, Rainbow Realty and Silver Spike), a cross section of geographically dispersed banks and credit unions (ranging in size from single state community institutions to First Citizens and another top 50 bank), and an eclectic group of family office advisers, investors and advisers involved or interested in cannabis opportunities. In addition to providing access to shared resources and opportunities, the ICLC has a focus on programming for its participants on key issues and emerging best practices. Its membership remains open to qualifying participants.

Welcome First Citizens! And to those other banks, come on in, the water’s fine.