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Direct Lenders See Profits in Hemp Where Big Banks Fear to Tread

While federal lawmakers in December opened the door for banks to get involved in the hemp sector, most remain reluctant.

By Kelsey Butler | April 24, 2019 at 08:34 AM
Hemp leaf The leaf of a hemp plant, grown in a field for medical research purposes. Photographer: Taylor Weidman/Bloomberg

With banks steering clear and the industry surging toward $22 billion in sales, hemp and its trendy ingredient known as CBD could be the next lucrative frontier for direct lenders.

Earlier this month, Mile High Labs — which says it’s the largest extractor of cannabidiol in the world — closed on a $65 million term loan from MGG Investment Group, a New York-based lender to lower middle-market companies with $10 million to $40 million in earnings. Mile High is using some of the proceeds to pay farm partners who grow the hemp it needs to produce CBD, which doesn’t give a high and is said to be a natural way to ameliorate health issues from anxiety and insomnia to inflammation.

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