Ordubegian Quoted on Real Estate Challenges Facing Cannabis Industry

Due to the continuing federal prohibition on cannabis, many federally regulated banks and other financial institutions do not engage with the industry, which forces related business partners, such as landlords, to find alternative financing solutions.

Aram said, “Some landlords freak out a little and charge a premium because they make the pitch that the government could come grab the property. At the end of the day, it’s the business hassle of not being able to bank the revenue and in some ways the bigger problem of … how do you avoid doing business with an entity that touches the leaf?”

Another issue is the lack of collateral. A license is a cannabis seller’s top asset. If the license is lost, then the landlord becomes in possession of illegal cannabis inventory.

“If you foreclose on real property that had a grow [facility] on it, or had weed there, you now have the right and honor and privilege of doing something with it,” Aram said. “But you’re in violation of state law because you don’t have a license.”

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