Our bank has a potential customer who is inquiring about financing to purchase a strip mall. One of the tenants of the strip mall is a medical marijuana dispensary. If we were to provide financing for the purchase of the strip mall, our customer would be receiving income from a marijuana related business.

Has anyone made a similar loan and if so, have you received any examiner scrutiny, had to conduct any additional due diligence, or update policies and procedures?

What are the potential risks of financing such a loan other than the property potentially being subject to a federal drug seizure under the Controlled Substances Act?

We've made a loan in a similar situation. For our ($250MM) Bank, we
1. Eliminated the revenue that was attributable to the MRB from our underwriting
2. Made sure the Board was aware of the transaction
3. Checked to ensure the dispensary was appropriately licensed by the state and did not appear to be violating any of the Cole Memo concers
4. Included that as a requirement for the annual review
5. Set the BSA risk higher than we would for a typical NOOCRE client.
6. Filed a Marijuana Limited SAR (and then got told not to by our examiners after the fact).

Really wasn't a big deal for examiners, but that's kind of specific to the examiner and your region. We've (Oregon) had legal MRBs for 5 years now, and next door WA has been even longer.

Your technical legal risk from the CSA is probably pretty severe. Replace "Marijuana" with cocaine or meth and think about the actions that the government could take if your borrower was knowingly leasing space to a cocaine distributor. They could probably seize the building. Could they include the Bank in the issue since you would be facilitating the business of cocaine distribution?