National Investment Connection brings together a network of licensed professionals across the nation to assist cash investors with creative ways to manage their money with turn-key real estate channels. That is their claim and they say it is all legal.
Shane Blocker was not originally involved in any type of cannabis venture, but he was involved in the real estate and banking industries. He considered himself a bit of an entrepreneur and a self-proclaimed problem solver. A couple of years ago, a member of law enforcement approached him and told him about a huge problem: Dispensary owners in Nevada could not bank their cash revenue due to existing federal laws.
This issue continues to plague the cannabis industry, in general, to this day. The main problem that law enforcement was most concerned about at the time was that the large amounts of cash made these dispensary owners susceptible to robbery. The officer explained that part of the plan to legalize cannabis was not to just make easier access for patients but, for law enforcement, it was also to get the large amounts of money out of the hands of street criminals. He added that, at the time, if a dispensary owner did try to deposit cash, the deposit would be tagged as cannabis money and listed in the bank’s Suspicious Activity Report (SAR), which brings its own set of unpleasant events down on the depositor.
So that officer asked Mr. Blocker to give the issue a look and see if he could find a solution. When Blocker took a look at the banking options with respect to the cannabis industry he found that there were no good options within the Financial Crimes Enforcement Network (FinCen) guidelines.
Then it came to him: What if he were to use real estate as a vehicle? He would take the cash, put it into a real estate transaction, and have it come out the other side no longer tagged as cannabis. Would that be legal? He spoke with his partner, Greg Luther, who works with a network of 30,000 realtors across the nation and asked him if he would be interested in partnering and approaching attorneys to see if they could figure out how to make it work.
Once the new partnership was established under the name National Investment Connection, they got down to business first by talking with cannabis attorneys for help with licensing issues. Although they all thought it was a great idea, it was a conflict of interest for them because they represented the cannabis licensees. They all directed him to one law office—Ellsworth and Bennion, in Las Vegas. Once retained, the firm discussed and researched money laundering laws, racketeering laws, and cannabis laws to determine how they could get to a point where completely legal real estate transactions could be made. The law firm spent months interviewing district attorneys, assistant district attorneys, and other cannabis attorneys, as well as reviewing the laws.
When they had completed their research, Ellsworth and Bennion came back to the partners and proposed a method and agreed to provide a formal “legal opinion” letter stating their findings. They told the partners that as long as they are completely transparent and complete and file all of the proper federal disclosures, it could be done legally. That opinion letter was dated March 31, 2017.
As a result, National Investment Connection now offers consultation and a “play book” to their clients—which guides them through the process of getting set up with attorneys, realtors, accountants, and compliance people; using real estate as a legal vehicle to transform cannabis cash into real estate ownership; and selling the property and taking the check to the bank. The money comes from a real estate transaction and not a cannabis transaction. Does this sound like laundering? The company says it is not, if all of the details are strictly adhered to.
When this issue was originally brought to them, National Investment Connection thought that they were looking for a solution for the legal medical dispensaries. It quickly became evident that the same problem existed for growers, processors, and even suppliers in the industry. And it is now being compounded as adult use cannabis is legalized across the nation.
One example is a grower who has a building constructed, HVAC installed by a company, lighting installed by another company, and irrigation installed by another. Presently these companies are paid in cash—large amounts of cash. And some of these companies come from other states to do the work. Think about a grow facility building that costs $700,000 to build and the contractor has to be paid in cash. The cash that the contractor collects for this work cannot cross state lines legally. This is an issue that affects all aspects of the business.
The system that National Investment Connection has designed targets real estate that is priced in the midrange of the market where it resides. Once a suitable property is found, the process is set up and the client is guided through the cash purchase. After the property is purchased and the title is in hand, improvements are made to the property. This is also paid for in cash.
Once all the improvements have been completed, the property is resold. The revenue from that transaction can legally be deposited into the bank free of any kind of cannabis tag. The average process takes about two months to complete.
National Investment Connection screens potential clients by ensuring that the client is in full legal compliance, which includes full disclosure, transparency, and payment of all necessary taxes.
Although they are located in Las Vegas, National Investment Connection operates throughout the US. They can be contacted at 702-557-6411 or at nationalinvestmentconnection.com.