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All News, In The News, Press Releases |
October 31, 2022

Will Wolfe Authors Cannabis Article in Law360

Cannabis leaf on Dollar bill

Authors and Contacts

William M. X. Wolfe

Heidi Schult Gregory

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Authors and Contacts

Heidi Schult Gregory

Heidi Schult Gregory

Member
William Wolfe

William M. X. Wolfe

Associate

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Financial Restructuring, Bankruptcy and Creditors’ Rights

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Cannabis
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Businesses seeking to enter the now-legalized recreational marijuana market in New York face challenges in obtaining the capital they need to grow. That’s largely due to the fact that cannabis remains illegal at the federal level. Presently, financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws are subject to criminal prosecution under several federal statutes such as aiding and abetting, and money laundering, in effect locking those business out of the banking system.

As cannabis companies desperately seek the cash they need to expand, they often feel pressured into agreements with terms heavily favoring lenders, often resulting in equity transfers in exchange for capital. This practice is known as predatory lending, and while it may not technically be illegal, it is often viewed as unethical.

Associate William Wolfe of our Syracuse office, a member of our Cannabis Industry Team, explains those dynamics in a recent article published in Law360. Will highlights two recent cases that illustrate the dangers and notes that while it is easier said than done, the best practice for cannabis companies is to make sure they “do their due diligence when seeking funding and refuse any loan terms that seem unreasonable or could potentially result in the forfeiture of their company’s assets upon default.”

Read Will’s article here.  

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Harris Beach PLLC Discover True Engagement image

Will Wolfe Authors Cannabis Article in Law360

News

Businesses seeking to enter the now-legalized recreational marijuana market in New York face challenges in obtaining the capital they need to grow. That’s largely due to the fact that cannabis remains illegal at the federal level. Presently, financial institutions providing banking services to legitimate and licensed cannabis businesses under state laws are subject to criminal prosecution under several federal statutes such as aiding and abetting, and money laundering, in effect locking those business out of the banking system.

As cannabis companies desperately seek the cash they need to expand, they often feel pressured into agreements with terms heavily favoring lenders, often resulting in equity transfers in exchange for capital. This practice is known as predatory lending, and while it may not technically be illegal, it is often viewed as unethical.

Associate William Wolfe of our Syracuse office, a member of our Cannabis Industry Team, explains those dynamics in a recent article published in Law360. Will highlights two recent cases that illustrate the dangers and notes that while it is easier said than done, the best practice for cannabis companies is to make sure they “do their due diligence when seeking funding and refuse any loan terms that seem unreasonable or could potentially result in the forfeiture of their company's assets upon default.”

Read Will’s article here.  

■ Authors

Heidi Schult Gregory

Member
(585) 419-8720
hgregory@harrisbeach.com

William M. X. Wolfe

Associate
(315) 214-2059
wwolfe@harrisbeach.com

Attorney Advertising. Prior results do not guarantee a similar outcome.
© 2022 Harris Beach PLLC

Content current as of March 28, 2023 10:27 am
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