Aug 10, 2020
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Are CBD loans in Oregon Legal?

The state of Oregon was at the forefront of cannabis legalization when they decided to make Cannabidiol (CBD) oil legal within their geographic borders. CBD, which stands for cannabidiol, a cannabinoid found in the cannabis plant, is non-intoxicating. Therefore, CBD won’t produce the same effects of getting high as other cannabis products containing THC.

In fact, Oregon legalized medical cannabis way back in 1998 when they passed Measure 67, the Oregon Medical Marijuana Act. Fast forward to 2014, and Oregon legalized recreational cannabis usage with the approval of Measure 91, the Control, Regulation, and Taxation of Marijuana and Industrial Hemp Act.

Clearly these legal efforts have made the west coast state of Oregon one of the most friendly locations in the entire United States for cannabis. Even their rules around CBD are forward-thinking. But this doesn’t change the fact that other states are still placing strict regulations around CBD and the production of CBD oil-infused products.

With CBD being the second-most-abundant cannabinoid found in marijuana or hemp plants after THC, it is getting plenty of attention for its beneficial anti-anxiety, anti-inflammatory, and seizure-reducing properties from entrepreneurs looking to cash in on this goldmine.

The question remains, are Oregon cannabis business loans legal?

Financing for Oregon Cannabis Businesses

There are credit unions that are providing banking services for cannabis businesses. But these offerings are not to be confused with loans or other financing opportunities. With the need for financing for Oregon cannabis businesses, financial companies are forming that provide financing and fulfill these needs.

Banks in Oregon

Currently banks aren’t extending bank loans to cannabis businesses in the state of Oregon, even with all of the legalization. The difficulty with the cannabis industry is that no matter how legal the sale of the substance may be, it doesn’t rearrange the fact that it is still illegal on a federal level.

From the point of view of traditional financial institutions, such as banks and credit unions, they are obligated to follow mandates by the federal government that state that transactions pertaining to cannabis are still illegal activities. It doesn’t matter which state the transaction takes place in.

If you still think that there is a loophole here that you can take advantage of, such as these regulations not applying to transactions related to a cannabis business, you are definitely wrong.

Any loans from banks and credit unions that are used to purchase equipment, real estate, equipment, or any other resource connected to cannabis businesses is going to be identified as money laundering.

The bottom line is that traditional financial institutions aren’t going to take any kind of legal risk just to finance your cannabis business from a lending or banking standpoint. All banks have to comply with a regulation called the Bank Secrecy Act that forces banks to flag transactions of $5,000 or more that may be associated with illegal activity.

Clearly financing is one of the major hurdles getting in the way of cannabis business owners flourishing, which makes companies that will provide CBD loans such sought after entities.

Beware of Predatory Lenders

The gap between cannabis businesses and proper financing has unfortunately led to many opportunities popping up with absurd interest rates of 40 to 50 percent on their loans and promises of allowing CBD businesses to utilize credit card sales.

Don’t settle for these schemes. Get the best interest rates you can on your CBD financing options by having all of the appropriate documentation ready before applying for a loan, including your balance sheets, income statements, bank statements, credit risk profile, and capital needs.

Now that you know what to look out for when setting up your Oregon cannabis business with financing, rest assure that credible help is available if you meet the requirements to get approved for a CBD loan from institutions other than banks and credit unions.

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