Steep Hill Alaska will suspend testing operations on March 31. The owner of Steep Hill’s Anchorage office building lost its loan from Wells Fargo on the grounds that the property is housing a cannabis business.
“The landlord’s loan came up for renewal, and during that process someone at corporate Wells Fargo sent a letter down saying that they wouldn’t renew the loan with a cannabis business in the building,” CEO Brian Coyle tells Cannabis Business Times.
Coyle says the business has been in the building for two years, since AK Green Labs first acquired a licensing deal with Steep Hill. The low-slung building on a quiet side street houses four other tenants.
“Wells Fargo just was adamant,” Coyle says, describing something of a negotiation process that had been unfolding since December between the financial company and his landlord. (Coyle added that his landlord had been supportive of Steep Hill Alaska’s business.)
Cannabis Business Times has left a message with Wells Fargo’s Alaska office, seeking more information on the company’s current stance to mortgages and cannabis businesses.
Steep Hill Alaska is now seeking a new building. If the business does not move out, Coyle says, Wells Fargo may foreclose on the property owner.
As Vince Sliwoski writes at Canna Law Blog, this isn’t unheard-of in the cannabis industry. “When a bank discovers that cannabis is being grown, processed, held or sold on its mortgaged property, it has the option, under contract, to call the loan. “When a bank decides to call a loan due to cannabis activity, the bank may give the mortgagor a limited window of time to cure the defect (stop the cannabis activities), or to find alternative lending. Given the realities of business investment and operations, the strictures of leases and the high cost of private lending, this can cause tremendous headaches.”
Alaska legalized adult-use cannabis in 2014.
According to Cannabiz Media, Alaska has issued testing licenses to four companies.