Partner Colorado Credit Union adds loans to its cannabis bank program, the $500 million-heritage institution announced tuesday.
The credit union, based in Arvada, Colorado, where recreational cannabis is legal, said the program’s first loan products would be home loans for properties containing existing structure, including new loans and refinances. .
The loan program will first be available to its 500 private banking customers who the credit union says have a combined cash flow of more than $200 million per month.
Doug Fagan, president of Partner Colorado, said the new loan program aims to help cannabis companies grow their business without having to sell assets or seek out private lenders — options he says many Cannabis companies turn to when they’re going through tough times and can’t access a bank loan.
The designation of cannabis as a Schedule 1 drug under federal law has left many financial institutions reluctant to open bank accounts for the emerging industry.
“It’s a way for them to get into traditional banking and grow their business, and overcome the kind of financial challenges we’re having in the current environment,” he told Banking Dive.
Fagan said the credit union’s loan program completes a “huge piece of the puzzle” missing from cannabis-related businesses, most of which don’t have access to government funding, like the Paycheck Protection Program. (PPP), a coronavirus relief effort intended to help businesses weather the economic downturn.
According to Policy guidelines 2018 issued by the Small Business Administration (SBA), which administers the PPP, “bbusinesses that derive revenue from marijuana-related activities or that support the end use of marijuana may not be eligible for SBA financial assistance.”
This same orientation also prohibits indirect cannabis businesses from receiving federal loans.
The policy, however, has not stopped several companies that provide ancillary services to cannabis businesses from receiving PPP loans, according to a Law360 analysis of PPP data that was released Monday by the SBA.
The publication, however, was unable to find plant-related businesses, such as dispensaries, that received PPP loans.
A cautious approach
Partner Colorado, to mitigate risk, is extending the program only to existing customers whose businesses have already been vetted by the credit union, Fagan said.
“We’re going slowly and carefully. There’s a real risk in terms of accepting payments on these loans, because you need to know where that money is coming from,” Fagan said.
Stan Zislis, a co-CEO and founding partner of Silver Stem, a medical and recreational cannabis company, is one of the first credit union customers selected to participate in the loan program.
“Lending means jobs for us,” Zislis said in a statement. “Home loans are a small step towards a full-service bank, but it’s a very important first step.”
David Michel, partner and general counsel at Igadi, a vertically integrated cannabis cultivation and retail business and client of Partner Colorado, said home loans will help his business eliminate leases and, therefore, create new opportunities. the wealth.
“We have a waiting list of people who want to borrow,” Fagan said. “We are also trying to engage some of our other partners in the financial sector to participate in some of these loans, so that we can make a little more than we can hold on our balance sheet.”
Fagan said Partner Colorado took care to work with state regulators to craft the program.
“We have worked closely with our state regulators, making sure they are comfortable with our policies and underwriting guidelines that we have put in place, and we have had their blessing,” a- he declared.
The credit union’s cannabis banking program was launched six years ago by Partner Colorado CEO Sundie Seefried with a unique vision to eliminate cash-based status from the industry, Fagan said.
“We think it was a good decision,” Fagan said of entering space. “As a credit union, we’re pretty community-driven and we get a lot of money from the streets, which creates security in our communities.”