The only constant in the cannabis industry is change. This article provides an overview of the latest developments and points out that lenders need a deep understanding of the inconsistent patchwork of laws and regulations and the continuing conflict of law between the states and the federal government before entering this space.

Secured lending in the cannabis industry has evolved significantly over the past four years. What was recently left only to the “hard money” lenders or to lenders of “last resort” is now moving into mainstream lending. From factoring to bank-initiated secured real estate transactions, more and more lenders are now entering the cannabis industry and lending on (relatively) competitive terms to Cannabis Related Businesses (or “CRBs”). However, collateralization of these loans remains difficult without understanding the various moving parts of the industry, ever-changing regulations and conflicts of law. Lenders must be cognizant of laws and regulations at the local/ municipal level, the state level and, of course, at the federal level to have any true protection and success. So, despite this quickly developing loan market, serious pitfalls and concerns continue to plague the industry for lenders.

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