- REZYFi is a Miami, Florida-headquartered growth mortgage origination and specialized financing company that primarily targets licensed and permitted cannabis companies and owners of real estate who lease to cannabis companies
- Traditional banks are governed by federal law, which criminalizes marijuana; as a result, they are hesitant to offer financial services to cannabis businesses
- The President recently set a process in motion that could culminate in the rescheduling of marijuana, although given that this review will not actually decriminalize the substance, the status quo, which disadvantages cannabis companies, will remain
- REZYFi believes cannabis-related companies will continue to experience difficulties accessing financing from traditional banks, presenting a major opportunity
Last month, the President called for marijuana rescheduling by directing the Secretary of Health and Human Services and the Attorney General to “initiate the administrative process to review expeditiously how marijuana is scheduled under federal law” (https://ibn.fm/BV6RE).
Currently, marijuana is classified in Schedule 1 of the Controlled Substances Act of 1970, a category reserved for drugs that, according to the US Drug Enforcement Administration (“DEA”), have a high potential for abuse with no accepted medical use (https://ibn.fm/WyVsr). In rationalizing his October 6 announcement, the President noted that “this is the same schedule as for heroin and LSD, and even higher than the classification of fentanyl and methamphetamine – the drugs that are driving our overdose epidemic.”
As consequential as the announcement might be, a recent article in MJBizDaily notes that this order has unleashed “a very long, very complex, and very unpredictable force on the world that might yet wreak unintended havoc” (https://ibn.fm/jyJth). This is because of the many unknowns associated with the move. For instance, it could enable struggling American marijuana firms to enjoy tax relief under Section 280E of the federal tax code. At the same time, however, large pharmaceutical companies could be incentivized to enter the cannabis industry, usurping business from existing but smaller players.
Moreover, at a legislative level, an act of Congress could cancel out the recommendations that emerge from the review process. And even if the rescheduling were successful, there are cons associated with each new schedule under which marijuana could be classified. For instance, the MJBizDaily article notes, rescheduling marijuana as a Schedule 2 drug will mean that cannabis companies will have to endure the arduous and expensive FDA approval process before their products can enjoy legal relief. Moreover, a new Schedule 3 or 4 status will still require FDA approval even though the cannabis industry is not designed to comply with it. Finally, reclassification to Schedule 5 will only permit marijuana’s use for medical purposes and not responsible recreational use.
Nevertheless, regardless of whichever schedule marijuana falls under post-rescheduling, the review, as is, will not decriminalize the substance. And as a result, the status quo, which sees cannabis-related companies struggle to obtain financing from traditional banks, may remain. (Traditional banks abide by federal law, which currently criminalizes marijuana use.) This presents a gap that REZYFi and its wholly owned subsidiaries, REZYFi Lending and ResMac, have sought to fill. In fact, REZYFi believes cannabis-related firms will continue to experience difficulties obtaining financing from traditional sources – the rescheduling efforts notwithstanding – creating opportunity for the company.
REZYFi is a growth mortgage origination and specialized financing company headquartered in Miami, Florida. The company primarily offers a variety of real-estate-related first and additional mortgage-based financing and project-specific financings to licensed and permitted cannabis companies and owners of real estate who lease to cannabis companies. Through REZYFi Lending, the company provides specialty lending, cannabis commercial lending, and cannabis working capital letter of credit (“LOC”). On the other hand, it offers correspondent, retail, and wholesale mortgages through ResMac.
REZYFi believes the demand for innovative financing offerings by players in the cannabis market will continue to grow as more geographic markets legalize recreational and medical cannabis usage, a belief that has fueled its expansion within the United States. Currently, REZYFi is licensed in 36 states but is looking to expand into additional jurisdictions.
For more information, visit the company’s website at www.REZYFi.com.
NOTE TO INVESTORS: The latest news and updates relating to REZYFi are available in the company’s newsroom at https://ibn.fm/REZY
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