In my post of June of last year, I wrote about the dangers that commercial lenders may face should they provide financing to borrowers who lease to medical marijuana dispensaries real property that is pledged as collateral for their loans. Since that time, much has been made about the latest federal government spending measure approved by President Obama at the end of last year. This spending measure denies funding for enforcement actions by the federal government against any person or entity who acts in accordance with state law that permits the medical use of marijuana. Therefore, it would seem that at least as long as this spending measure is in place, the federal government will not be taking action, including civil forfeiture actions discussed in my previous post, against medical marijuana dispensaries in California or in any of the other states that permit the operation of medical marijuana dispensaries.

Nevertheless, the use, sale and possession of marijuana remains illegal under federal law. Further, there is nothing that stops the federal government from reversing its position in future federal spending measures, in order to permit federal action against medical marijuana dispensaries. In theory, such a change could go into effect in the next federal spending measure for 2016. Accordingly, reading too much into the latest federal government spending measure may be dangerous. I have spoken to lenders who are now considering lending to borrowers who either lease or propose to lease the real property collateral to medical marijuana dispensaries, in order to discuss how their loans and collateral can be best protected. However, I believe that lenders may still face the same potential dangers discussed in my previous post, including loss of their liens, depending on future spending measures, unless the federal government takes more definitive action declaring marijuana legal at least for medical purposes.

Stay tuned and I will keep you posted on the latest developments regarding medical marijuana that affect commercial lenders.