California Hard Money Lenders Should Beware The Pitfalls Of The Cannabis Industry

Arizona Home Loan Staff Level 4 Funding Mortgage Brokers

When it becomes legal to sell and tax the sale of recreational marijuana in California in 2018 there will be a tremendous opportunity for California Hard Money Lenders to make money—but there will also be some serious pitfalls to be wary of.

When Proposition 64 passed in California during the November elections, many celebrated it as the right thing to do. They firmly believe that by legalizing recreational use that the world they live in could be a better place. There would be less of a burden on the legal system, and people could have access to something that could be beneficial to them.

Oh yeah—and there would be a ton of money to be made once it becomes legal to sell (and tax) next year.

For now, people 21 and older are allowed to possess up to six plants and possess about an ounce of marijuana. So, or now, the law will likely result in fewer people being arrested. But come January 1, 2018, when the sale and taxation of marijuana for recreational use becomes legal, there will be an opportunity for California Hard Money Lender to make some serious money.

Beware The Deal That Looks Too Good

When that fateful day comes, there will be a mad scramble among investors looking to cash in. They will want to do whatever they can to set up shop and open the doors as quickly as they possibly can. It will be interesting to see if banks decide to approve loans for a cannabis shop, but if they do not, California Hard Money Lenders will be more than happy to fill the void.

First—he or she will need enough capital to open shop. California Hard Money Lender will likely get a good percentage of that business since they are more forgiving than traditional loan sources, easier, and quicker to approve. However, they may want to be wary of who they get into business with due to some potential legal ramifications:

– Criminal liability: Under the Controlled Substances Act, financing a marijuana business can open up the possibility of criminal prosecution. A federal court has blocked the Act from being applied to the state’s medical marijuana industry, but there is no guarantee that the recreational one will be protected as well.

So, basically, invest at your own risk.

– Money laundering: many financiers have expressed concern over federal anti-money laundering laws being applied and leading to prosecution. Should a financial institution step up and agree to follow the Financial Crimes Enforcement Network’s regulations, they could end up becoming the bank of the cannabis industry in California.

Is There A Future For California Hard Money Lenders In Pot?

It is hard to tell exactly what government entities are doing or are sometimes planning, but maybe Proposition 64 required investors to wait until 2018 for a reason. Maybe the idea behind the delay was to give lawmakers chance they need to set up the proper and necessary regulations before business are ready to open their doors.

Happy senior business man making his notes at workDennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC 
Private Hard Money Lender

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About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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