In a recent report, it has been observed that direct lenders have been showing more interest in lending to hemp sector than banks. Hemp and its ingredients based sectors are witnessing a high sale which has prompted direct lenders to supply the capital to Hemp producers. Federal lawmakers gave permission to banks and direct lenders to enter the hemp sector but banks have not shown any interest due to fear of regulators. Earlier, direct lenders only used to provide capital to tech and consumer spaces based businesses or small companies. Now, with some reluctance in the initial stage, they are jumping into hemp sector to help them make a huge profit.
Mile High Labs, which is known for extracting cannabidiol on a large scale, received a $65 million term loan from MGG Investment Group in February this year. The CFO of Mile High Labs said that direct lenders want to enter into hemp sector but they have a little bit of hesitancy in their mind. That is why they are waiting for other lenders to step in so that they too could do so. Before selecting MGG for loans, Mile High Labs looked for several lending options with the help of Danny Moses, a private investor of Merida Capital Partners.
Because of the lenient capital requirement guidelines and fewer regulations, private direct lenders have been jumping into fast-growing fields. As these newly emerging industries don’t have any track-record of cash flow so banks show less interest in lending capital to such businesses. The demand for CBD is increasing in the US at an excellent rate so there is going to be more private direct lenders in the future. Last year, CBD market made $610 million profit and it is expected to reach $22 billion by 2022.