Cannabis Lending Issues in Arizona

It is not very common for banks and financial institutions to provide commercial loans to cannabis companies in Arizona. So why is that? The answer is not always as simple as it may seem.

The first thing to consider is what collateral the lender could secure if it wanted to make a loan to a cannabis enterprise in Arizona. In general, there are two classes collateral – real property and personal property. To perfect a security interest in real property in Arizona, a lender must record a deed of trust in the real property records in the county where the real property is located. In general, to perfect a security interest in personal property, among other things, a lender is required to file a Uniform Commercial Code (“UCC”) Financing Statement (commonly referred to as a UCC-1 Financing Statement) with the Arizona Secretary of State (the “SOS”).

All of this seems rather straightforward but there are several twists and turns. For a lender, to ensure it can recover if there is a default by a borrower, these issues are paramount. And even if some of these issues can be overcome, banks and financial institutions must nevertheless comply with the Treasury Departments

Read More Here…

Share on facebook
Share on twitter
Share on reddit
Share on pinterest
Share on email

Bud Digest

Scroll to Top