BOULDER – In recent years, the marijuana industry has flourished, and financial institutions in Colorado have faced the challenge of navigating these uncharted waters. Countless people work in grow houses and dispensaries across our state, and many of them have had trouble obtaining consumer credit or opening retirement and other types of investment accounts.
The businesses themselves have even faced similar challenges. Many have had to operate on a cash-only basis, keeping an unsafe amount of money on their premises simply because no banks were willing to accept their deposits. When an institution known as The Fourth Corner Credit Union attempted to open in late 2015 with the specific intention of serving the marijuana industry, it was denied the administrative approval that is necessary for a bank to operate. Banking has been hard for all members of the marijuana trade, but these hurdles have not necessarily been placed maliciously.
Because banks and lenders answer to many federal governing bodies, their focus has been primarily on adhering to the regulations set forth by those agencies. That remains true. We can’t ignore the fact that the federal government says that marijuana is illegal. However, there are a few things to know about before you change careers, or worse, throw in the towel on your dreams of becoming a home owner.
The first and foremost factor to consider is that while marijuana is, in fact, illegal on a national level, it is perfectly legal here in Colorado. The people who work in this industry adhere to the same employment regulations that apply in any other field, and they are earning their living without breaking the law. With all of that said, it’s critical to understand how the nature of your relationship with your employer affects your ability to obtain a mortgage.
Independent contractors who have a relationship with the marijuana industry are not permitted to count marijuana-related income toward mortgage qualification. This also applies in other financial situations. For example, one Colorado woman’s financial institution unexpectedly closed her retirement account because she was an independent bookkeeper who had a marijuana dispensary as one of her clients. Along those same lines, if you own 25% or more of any business in the marijuana industry, you are also considered to be self-employed, and that income cannot be used to qualify for a mortgage, either.
However, if you are a W-2 earner, you will be happy to know that your income is treated in the exact manner as that of any other traditional employee. You will not face the same challenges as your employer, in this case.
No matter your profession, the mortgage process can be very complex. It all boils down to knowing who and when to ask for help. If you’re in the market for a new home, regardless of your line of work, I would love to speak with you about your options for home ownership. Contact me at [email protected] or by phone at 303.579.5517.
Michaela Phillips is the Vice President of Mortgage Lending at Guaranteed Rate, Inc., the 8th largest retail mortgage company in the country. Since entering the mortgage industry in 1994, she’s consistently been a top producer. Being a VP at Guaranteed Rate offers many advantages to her and her clients including unparalleled customer service, efficiency, and most importantly competitive rates.