Telling your family you work in marijuana can be an ordeal. There are the arched eyebrows, the disappointed faces, the furtive looks and sidelong glances followed by an entreaty as to whether or not you’re holding. But this embarrassing ordeal isn’t even close to the worst rite-of-passage for cannabis-industry workers.
Just wait until you try to buy real estate.
There’s an awful lot of money flowing around cannabis circles, according to everyone who has ever said anything on the issue. But where is that money? Buried in the backyard, stuffed in mattresses or stashed in a bank that either doesn’t know where it came from—or does, and is willing to take an enormous risk, and charge you a premium for the privilege.
The banks that do take marijuana money are few, and for obvious reasons, generally keep their names out of public view.
Officially, any insured and accredited financial institution is not supposed to take deposits from a marijuana business, since the money comes from the sale of (federally) illegal drugs. And these financing issues also extend to anyone who works at these businesses. They can deposit their paychecks in a bank, sure, but trying to secure a mortgage on a home is another issue, according to one Nevada lender.
Sam Britt, sales manager at Nevada-based iServe Residential Lending, granted an interview to Reno, NV-based TV station KOLO. As Britt observes, nearly every home loan carries at least some guarantee from a federal institution.
“Therefore, we’re running into a scenario where if you get somebody who comes in, and let’s say they work at a vape shop, if their income is derived 50 percent or greater from marijuana, we can’t give them the credit for income, meaning that we can’t write them the loan because the Feds aren’t going to back it,” he told the television station.
Remember the subprime crisis, when Wall Street took away our homes and 401(k)s and then received hefty bonuses for it? Rampant speculation on home loans fueled that, and banks still buy, sell and swap loans like baseball cards—and that’s one reason why a weed-backed loan is a problem.
“A lot of your banks, including mine, we’re in a situation where we are shying away from it because nobody wants an unsellable loan,” Britt explained.
There’s apparently one exception, according to the station: Marijuana dispensary employees with W-2s can qualify for a three-percent down payment assistance with Fannie Mae. But independent contractors—like anyone involved with cannabis cultivation, or anyone with a 25 percent or more stake in a dispensary—are out of luck.
If that doesn’t work, a prospective home buyer can find someone with a “legitimate” income to co-sign the loan, a cosigner who would then presumably be plied with bags of cash.
A home-seeker could also find what KOLO delicately described as an “alternative lender.” If that sounds shady, it is: It’s not borrowing money from the mob, but it is a high-interest commercial loan not too different from a payday loan from the check-cashing shop. If you like paying 20 percent interest, that’s your business; you’ll have no trouble finding a lender eager for anyone willing to pay that much over a 30-year period.
There’s at least one more way around this—offering an “alternative” version of the truth. Dispensaries often contract out doing their payroll to a third-party. Thus, workers will receive a check from a payroll services firm rather than a dispensary—so in theory, they could claim to be an employee of XYZ PAYROLL rather than a weed club. This, unfortunately, is “legal money laundering,” Britt said. “These companies… take that money and wash it, so to speak, so it’s lendable.”
If you’re a 1099 contractor, you can easily pass yourself off as a “horticulture consultant” or “construction adviser.”
Think long-term. This is more strategic than writing “I BREAK FEDERAL LAW ALLDAY ERRDAY” on your loan application. If morals are holding you back, just call it the “Trump Method.”
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