How private credit built - and will continue to sustain - the cannabis industry

(This is a contributed guest column.To be considered as an MJBizDaily guest columnist, please submit your request here.) Jarrett Anneberg (Courtesy photo)In the absence of traditional banking, private credit has emerged as the cornerstone of the U.S.

cannabis industry.Alternative financing groups such as AFC Gamma, Chicago Atlantic, Innovative Industrial Properties and NewLake Capital Partners didn’t just fill a gap – they created the foundation upon which the modern cannabis market was built.

Unlike other sectors where private credit is an emerging trend, in cannabis, it has been the only option since the industry started raising institutional capital around seven years ago.Since there is no traditional banking sector in cannabis, many of these lenders have been in the private credit game for the past few years or more because, frankly, there was no other alternative.

ADVERTISEMENT Over that time, billions have been deployed: San Diego-based Innovative Industrial Properties has invested more than $2 billion into cannabis real estate.Illinois-headquartered Chicago Atlantic and others have invested over $1 billion into the sector.

Connecticut-based NewLake has committed more than $425 million.Without this financing, the cannabis sector – shut out of federally regulated banks – would not have been able to scale cultivation, expand retail or establish the infrastructure necessary to serve a national footprint.

This is not a hot new trend.It’s how the cannabis industry was built.

Cannabis industry defined by necessity Private credit in cannabis began as a workaround – a response to the industry’s exclusion from traditional financial services because of marijuana’s status as a Schedule 1 drug under federal law.But the workaround evolved into a highly structured financial solution.

Through sale-leasebacks, high-yield loans and other instruments, private credit not only met the needs of cannab...