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Opinion: What marijuana real estate lenders look for in potential borrowers

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Securing capital to fund marijuana-related properties can be a complex and challenging endeavor – especially given the current state of the industry.

Equity markets are still getting pummeled, margins are being squeezed and pervasive, onerous regulatory hurdles continue to limit banking.

Understanding the factors that real estate-based lenders consider when evaluating borrowers can significantly improve a company’s chances of obtaining funds to strengthen the business, expand operations and solidify its position in the market.

By aligning with these expectations and implementing effective strategies, borrowers can position themselves as attractive candidates for capital and maximize their chances of success.

In-depth project understanding and preparedness

One of the first things that lenders seek in borrowers is a comprehensive understanding of their real estate project.

Borrowers should be well-versed in the intricacies of their ventures, demonstrating a clear vision and goals.

When approaching lenders, they need to be able to articulate the purpose of the loan, whether it is for property acquisition, expansion, refinancing or strengthening their cash position.

They must provide specific project details, including the property’s address, purchase price, budget allocation and intended use.

And they need to be prepared to handle unforeseen costs and project delays and have strong mitigation strategies in place.

Also, they need to keep in mind dynamics that are unique to cannabis.

For example, tenant-improvement costs and equipment costs are much higher than they are for non-cannabis tenants.

In addition to understanding their own project’s cost and timeline, borrowers need to have a  good understanding of the competitive landscape and what the market looks like as well as local and state regulations.

In some cases, there are zoning restrictions that could prevent build-out, so borrowers should know these conditions before approaching a lender.

In a capital-constrained environment, lenders don’t have time to ask repeatedly for basic information.

This is why it’s imperative for borrowers to conduct their own research and develop a plan that outlines the project’s timeline, milestones and potential risks – along with mitigation strategies.

By showcasing their preparedness and professionalism, borrowers instill confidence in lenders and demonstrate their ability to execute the project successfully.

Financial stability and feasibility

In the early days of marijuana, operators and analysts placed a strong emphasis on dominating market share, scaling quickly and first-mover advantage.

Now that the industry has matured and many companies have gone out of business, people are waking up to the dangers of unbridled growth and the uncertainty of stock valuations.

Instead, investors are focusing on business fundamentals and cash flow.

Lenders need assurance that borrowers have the means to pay their debts without delay.

A major component to this is having a strong sponsor as the guarantor and ensuring all parties involved are aligned on the business plan – all while factoring in equipment, tenant-improvement costs and potential delays.

If the operating company is financing a build-out, it might need to show steady cash flow coming in from other assets before the build-out is complete and revenue-generating.

Regardless of what the financing is for, borrowers must demonstrate an accurate and realistic business plan based on fundamentals with contingencies in place.

Don’t believe that lenders will be satisfied by one or two quarters of financials – reputable lenders dig beneath the surface.

In this nascent industry, things can change rapidly, and companies need to be able to illustrate that they have experienced, adaptable management as well as a diverse portfolio of assets, strong partners and a solid balance sheet – plus feasible revenue streams and cash-flow projections.

Additionally, to help gain the confidence of lenders, it’s important for principals to prove they have a significant stake in the property and are willing to invest their own funds.

A higher down payment or equity stake demonstrates the borrower’s commitment and reduces the lender’s risk.

Borrowers also need collateral and should have a low debt-to-income ratio to signal that they can make debt payments on time.

Industry experience and expertise

With the marijuana industry being so nuanced, complex and new – coupled with the overall lack of robust historical data – industry experience is crucial.

A lender needs to feel confident that the borrower understands the dynamics and regulations of the markets in which it operates.

The operator should have strong standard operating procedures in place, be able to demonstrate a history of compliance and have lawyers on retainer and/or use regtech to remain in compliance.

During due diligence, a lender will find any skeletons a company might have in the closet.

Lenders will pay special attention to credit history and the borrower’s track record of property management.

Beyond that, the operating company must demonstrate that it has a proven track record and strong management team with people who have been in the cannabis industry long enough to successfully navigate its peaks and valleys.

Lenders will look at the borrower’s partners, infrastructure, operational efficiency, production costs and viability of their short- and long-term strategies while taking market saturation and competitive landscape into account.

Regardless of the size of their company, borrowers must clearly illustrate their value propositions and competitive advantages:

  • Do they excel in terms of operational efficiency and producing solid margins?
  • Do they offer comparable quality at lower price points in relation to their competition or is their quality superior?
  • Have they developed brand affinity?
  • Are they offering unique products that others in their market aren’t?

Companies must prove to a lender that they consistently produce quality products, their ongoing operations are feasible and can withstand price compression and, when problems do arise, they can remediate swiftly and effectively.

Also, they need to show they are agile, as dynamics evolve rapidly in the cannabis space.

Viable long-term strategy regardless of reform

One of the major pitfalls we’ve seen with operators in the marijuana space is when they bank on reform and bake that into their core strategy.

If a company goes all-in on a new market opening and major delays occur, such as those we’ve seen in New York, the business might be dead in the water.

That’s why having a diversified strategy is key.

Of course, borrowers should not spread themselves thin and establish operations in several states without adequate footing or market presence.

There’s been a ton of media hype around when the SAFE Banking Act will pass, and market valuations have largely fluctuated based on public perception of regulatory momentum.

Many companies focused on expansion at the expense of fundamentals when they thought SAFE would pass, believing they’d be able to raise money from institutional investors.

While SAFE is gaining momentum again, nobody knows for sure if or when it will pass. Veteran lenders are more aware of this than anyone.

So, as a borrower, don’t approach a lender with a strategy that relies on federal legalization.

You need a strong strategy that stands up – regardless of when widespread federal reform happens.

Source: https://mjbizdaily.com/what-cannabis-real-estate-lenders-look-for-in-potential-borrowers/

Business

EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices

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A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.

Investigation Under Digital Markets Act Gains Momentum

The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.

Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.

Industry Groups Demand Swift Action

Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.

Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.

In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.

Google Denies Allegations

Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.

However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.

Potential Billion-Euro Penalties

If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.

Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.

Wider Implications for Big Tech

The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.

A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.

As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.

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AI & Technology

Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations

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Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).

The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.

Trial Push Despite Multi-Million Euro Settlement

The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.

Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.

A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.

Allegations of VAT Evasion Through Marketplace Sellers

At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.

Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.

Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.

Italian Government Named as Affected Party

In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.

Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.

Multiple Investigations Add to Pressure

The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.

Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.

In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.

Amazon Denies Allegations

Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.

Broader Impact on Europe’s Digital Economy

If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.

With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.

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Aviation

IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?

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Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.

Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.

Root Cause: IndiGo’s Market Monopoly

The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.

This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.

Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.

Government Intervention and Regulatory Weakness

The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.

Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.

The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.

If Telecom Giants Fail: A National Paralysis

The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?

If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.

In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.

E-commerce Monopoly: Another Fragile Ecosystem

The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.

Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.

A Wake-Up Call for Regulators

The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.

As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.

Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.

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