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Institutional Cannabis Lenders Community Holds First Meeting

Blog Post
July 28, 2023

BMD Attorneys Stephen Lenn and Brandon Pauley have organized the Institutional Cannabis Lenders Community (ICLC), which is a community of institutional lenders including banks, credit unions, dedicated cannabis loan funds and family office/ultra-high net worth investors and are excited to announce that the group recently held its first meeting. The more than 20 participants in the ICLC, which was organized to enhance relationships among institutional cannabis lenders and provide forums for evolving best practices, includes four of the major cannabis loan funds, more than a dozen banks and credit unions, and a cross section of other organizations that are involved in institutional cannabis finance activities.

The initial virtual meeting was held on July 19th. The meeting topic was best practices for “Internal Revenue Code Section 280E for Lenders.” The presentation was offered by James B. Mann, a preeminent 280E tax attorney who was lead counsel for Harborside and argued its appeal in the U.S. 9th Circuit Court of Appeals of an adverse 280E U.S. Tax Court ruling (Patients Mutual Assistance v. Commissioner). James advises companies with respect to cannabis-tax related topics.

During the presentation, James offered insights for the cross section ICLC constituencies that were represented on the call regarding:

  • The need for lenders to understand and take steps that may be available to mitigate the potentially significant consequences of 280E tax lien priorities
  • Cannabis tax planning issues relevant to lenders
  • Cannabis 280E due diligence, including Federal tax return red flags

At its organizational meeting in Scottsdale this past March, ICLC (Institutional Cannabis Lenders Community) participants determined to target 2 virtual and 2 in person meetings, the latter scheduled around major cannabis conferences many participants would be attending. The next in person meeting is scheduled for September 26th in Chicago the day before the Chicago Benzinga Capital Conference. The meeting will be held at the conference hotel, the Chicago Marriot Magnificent Mile.

If you are interested in participating in the ICLC or attending the upcoming meeting, contact Steve Lenn, salenn@bmdllc.com, or Brandon Pauley, btpauley@bmdllc.com.

Cannabis LawICLCStephen A. LennBrandon Pauley
Blog Post

Invitation to Banks & Family Office/Ultra-high Net Worth Investors Exploring Cannabis Lending to Join Our Informal Institutional Cannabis Lenders Community

December 2, 2022An update on the latest developments in the cannabis banking/lending space by subject matter expert, BMD Scottsdale/Phoenix Office Managing Partner Stephen LennBlog Post, Client Alert

Community Banks: Collaboration, not isolation, is the key to protecting/ enhancing the cannabis business you pioneered

August 26, 2022As we prepare for the plenary session of the informal institutional cannabis lenders community announced in my previous article, I am pleased to advise that participants now include 5 of the best-known dedicated loan funds; a select group of commercial banks ranging in size from single state community banks to mid-size regionals making cannabis loans into the mid-8 figures; and, a syndicator of credit union cannabis loans.Blog Post

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August 4, 2022Non-compete agreements are an ongoing topic of dispute. Employers and their advocates point to the efficacy of non-competes in protecting proprietary information. Employees and their advocates argue about worker mobility and that employers unduly burden workers’ ability to seek better jobs. The Biden administration has put forth its position, and state legislatures have introduced bills addressing the enforceability of non-competes. Here is what you need to know:Blog Post

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Explosive Growth in Pot of Gold Opportunity for Bank (and Other) Cannabis Lenders Driving Erosion of the Barriers

May 13, 2022Our original article on bank lending to the cannabis industry anticipated that the convergence of interest between banks and the cannabis industry would draw more and larger banks to the industry. Banks were awash in liquidity with limited deployment options, while bankable cannabis businesses had rapidly growing needs for more and lower cost credit. Since then, the pot of gold opportunity for banks to lend into the cannabis industry has grown exponentially due to a combination of market constraints on equity causing a dramatic shift to debt and the ever-increasing capital needs of one of the country’s fastest growing industries. At the same time, hurdles to entry of new banks are being systematically cleared as the yellow brick road to the cannabis industry’s access to the financial markets is being paved, brick by brick, by the progressively increasing number and size of banks that are now entering the market.
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