New Chicago Firm Brokers Long-Term Lease Deals For Cannabis Businesses
If you want in on the cannabis business, you’re going to need some green. Greenbacks, that is. Financing the growing multibillion-dollar industry is harder than you think. Banks seldom go anywhere near the industry thanks to the now infamous “Cole Memo” in 2011, which warned bankers not to open cannabis-related accounts or they could face money-laundering charges or possibly lose their FDIC insurance.
HerbFront, a Chicago-based cannabis real estate/zoning compliance tech company wants to help solve that part of that problem. Limited access to traditional capital can make things hard for growers and dispensaries. “The industry is kind of hamstrung,” says Jake Meilach, a partner at HerbFront. “So we evolved into HF Capital.”
A business need only to approach HF Capital with a property listing, a down payment (anywhere between $5k and $10k, depending on the case) and a three- to six-month lease deposit. HF Capital will negotiate a long-term lease deal, Cannabis Business Times reports.
So what’s the catch? HerbFront’s lease rates are much higher than market value (up to two and a half times regular lease rates), so doing homework and making sure the rent fits in the budget is key. But, as Jake explains, renting “enables [business owners] to not bring in a bunch of outside equity to sit on the real estate or take on an incredibly expensive short-term loan.” [CBT]
