As a REALTOR®, my job is to help people buy and sell a home with the least amount of stress or despair as possible. This job can be more challenging than you can imagine.
In November 2018, this job was pushed to the limit with one buyer client. I met a man who wanted to purchase a home here in Las Vegas. He had good credit and he had good income. The problem was that the banks were discriminating against him. It was not because he was a male. Nor was it because of his race. And, it was not because he was in his 30s. It was because of his job.
You see this man worked in the Cannabis industry. Even though recreational and medical marijuana is legal in the state of Nevada, it is not legal on the federal level. Thus, most banks will not give the people checking or savings accounts. Much less give them a mortgage.
At that time I did not even know that this problem existed. There are thousands of people who are employed in the Cannabis industry. This ranges from your budtender at the local dispensary to the chemist at one of the local grow houses.
The challenge with banking is that banks are FDIC or federally insured. Cannabis is still looked as a Class-1 substance on the federal level. Thus, any banks giving accounts to an employee could be looked at as conducting money laundering.
The First Step in Solving the Problem
In December 2018 I was working with a lender who had just changed mortgage brokers. His new brokerage has a loan program where they would give Cannabis W-2 employees loans. These loans are the same FHA, VA, USDA, Freddie Mac, or Fannie Mae loans you would typically see for any other wage earner.
The only requirement is that the borrower has to account for their income, even if they are paid in cash. Thus, they have to deposit their entire paycheck into a bank account.
This can be easier said than done. First, they would need a bank account and second they would have to be diligent about making those deposits and not holding anything back, especially if they are paid in cash. The deposit must match the pay stub.
The second challenge I faced was finding a title company who would be able to work with these people. This is mainly due to accounting for the initial earnest money deposit and the closing funds need to purchase a home. These funds have to be accounted for and wire transferred into the escrow accounts. They cannot be paid in actual cash money.
By a fluke of nature I spoke with one title company on another topic and then the topic of Cannabis employees buying a home came up. He said to me that he could definitely do the task. Problem solved.
The last hurdle was to find a banker who would be okay with working with people in this industry.
Every bank and credit union I spoke with said that they could not maintain an account with them. If the person already had an account or opened one and the bank found out that deposits were being made from a Cannabis paycheck that they would have to close the account, immediately.
One day I was speaking with a gentleman about this subject and he said that he knew of a bank who would give checking and saving accounts to these people. They would have to be employees and not owners of the company, though.
I contacted several individuals with this company and they all verified with me that they could do it.
As a REALTOR®, I am always looking to solve problems in a creative manner. It was finally relieving that after 6 months of painstaking research I now had a team who could do every aspect of the home buying process. From the banker who would open a checking account to the lender who will give the loan and then to the title company to facilitate the transaction. I now have a full team to solve a problem most people didn’t even know existed.
Kevin Dunlap has been in real estate since 2002 when he bought his first house in a small town in North Carolina. Since then, he has ran a real estate consulting business since 2004 specializing in lease options and seller financing. He got his REALTORS® license in 2012 and is currently working at TR Realty. He has been helping people in creative situations to be able to purchase a home. You can find him online at www.KevinSellsVegas.com.