Escrow Account vs Attorney IOLTA

Escrow service will become the next great equalizer in this industry. When the Farm Bill was signed and certain regulations changed, the way was paved for the use of licensed and bonded escrow services in certain aspects of the hemp CBD value chain.

Up to this point, the verifications for funds have been through the use of attorneys. Attorneys and their clients have an attorney-client privilege which allows them to discuss anything between themselves and never have to tell you any of what they discuss. Attorneys have played a key roll in helping get transaction accomplished for the most part and many attorneys deserve praise and recognition for their assistance in helping get transactions across the finish line. Some attorneys, on the other hand, have stolen millions of dollars of buyers’ money from their trust accounts and IOLTA accounts.

Attorney IOLTA accounts pay direct to the supplier on behalf of the buyer and once the attorney for the buyer is in contact with the supplier, the attorney for the buyer can renegotiate price on behalf of the buyer. After that, they can cancel the original transaction and go direct to the supplier with new pricing without having to disclose any details to anyone who was previously involved in the transaction because they have attorney-client privilege with their client. This is the formula used to cut out middle persons. (Example: biomass is selling for $.20 less PPP than the buyer is buying for in their contract. If the biomass is 10% CBD and the weight is 1,000,000 lbs. then the buyer is paying $2,000,000 extra for the purchase. When the buyer’s attorney talks to the supplier and finds this out, they are required to disclose this to their client. They are also prohibited by law from disclosing to anyone else what they discuss with their clients. What do you think happens next?)

Attorneys have a fiduciary duty to their clients only, not to the transaction. Wealthy buyers pay good money for their attorneys to represent them and get them the best deal possible. By law in escrow states, escrow has a fiduciary duty to the transaction and representation of all parties associated with that transaction. Escrow earns a service fee from the transaction itself based on the total amount of the transaction.

Escrow is offered by a third party fiduciary service whose fiduciary is to the transaction. Have you ever heard of an attorney wanting a percentage on a transaction in the CBD space? That’s an example of not providing a fiduciary to the transaction but instead attempting to profit for oneself. Escrow is paid for its service from the transaction through the earning of ‘basis points’ (look it up on Investopedia) and one basis point equals 1/100 of one percent. Basis points are accessed based on the transaction type for risk associated with the insurance and bonding company that is insuring the transaction.

In Colorado, DORA has no licensing requirements for escrow services and any company calling themselves an escrow company should be looked into to see how they are licensed in their state, how they are bonded to each transaction and who they are held accountable to perform with integrity by. Anyone can open an LLC there and call themselves an escrow company and if they are using an attorney trust account or a business bank account for transactions, they are not a true escrow service. In this instance, the risk of loss of funds could be very high. When we are talking about millions of dollars and no accountability through state-licensed fiduciary service practices, a big risk could be on the horizon for keeping funds in a Colorado escrow account.

My background for the past 20 years has been in Wall Street finance, real estate, and escrow. I’ve been in the CBD space for a number of years too. My goal has been to find a way to help transactions get into an accountable position with the ability to transact. Escrow allows for such an ability. Be careful of the escrow service you use. Not all escrow companies are the same.

I am happy to assist anyone who wants more information on how to establish an escrow account for a Farm Act compliant transaction, how to find a reputable escrow service, how to get into escrow to proof funds without actually moving any money out of a buyers account allowing the buyer risk-free peace of mind. Please DM me for any person inquiries that you may want to keep private.


Got a website?

So what you’re saying is that any industry using escrow accounts in Colorado is in jeopardy not just the hemp industry. Is that right?

I’m saying escrow isn’t a licensed service in Colorado. Title and Escrow are licensed when used in combination with one another but no title services are being used in this as their is no real property associated with a transaction involving hemp products, except for those where land is being sold to produce hemp.

@moveweight we do not have a website for these services. Please email me at

@dppk knows what he is talking about. We have used Attorneys for large transactions and contact based deals. We have great stories of success and a few negative to report.

Why not use a letter of credit? NON REVOCABLE transferable once.
It provides protection for the buy and seller. I used them for many products including International business.
The Buyer sets up.the LC at the Bank
Sends it with a one to buy PO dated.
The seller can then get the order ready before it expires…when its ready he sends the invoice to the buyer with pick up address. The Buyer sends his preferred shipper. The seller provides the shipper with the packing list the shipping confirms the load with the packing list when the loads the material and seals the load now the shipper has the load at the dock or in the container the shipper is insured ( make sure the insurance is a good USA or international company)
The shipper hands the seller the Copys of all the signed documents.
1.the Invoice for the load
2. Packing list.
3.Bill of Lading with the Seal number on it

The seller presents the documents to the issuing back or corresponding bank. That has the Letter of Credit
The LC becomes cash and is transferred to the sellers back when the seller has confirmation of the funds he then releases the shipper to take the load.

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Hi dppk. I am a solo attorney practicing in WV, MD, DC and PA. I have clients wanting to use me as an escrow in repetitive CBD hemp transactions. Would like to discuss how to proceed, also happy to discuss potential business opportunities in this area with you. This is my first use of this website. Found your post in a browser search. Not sure if this is a private DM or not. Thx, Mark

Hello and thank you for your contribution to our thread. This is a community so its not just my thread. I appreciate the time it takes to include experience at a sophisticated level of that stated herein.

Letters of Credit are a great tool. When I’ve sold HMS1 and HMS2 to foundries in China, this is all I use. I use shipping containers, certification companies, Bill of Lading with seal numbers. Everything you’ve mentioned. Once Hanjin has set sail and is 150 miles into international waters, I factor the Letter of Credit with the buyer. In this format, my costs for purchase, CapEx, sg&a equals X, my sales price equals Y. I factor the Letter of Credit for Z. Z>X and Z is also less than Y. The company receiving the materials in China gets the remainder of the profit above Z to cover its costs for participation. This is all done in a transaction that is easily handled by “two reasonable counterparties.”

In the LC world, the transaction involves easy to locate Reasonable Counterparties. That is not as easy to find in this market. If you find it, have you really found it? Are you certain it’s not a broker pretending to be a seller? Are you certain the product test to spec? And of course, those can all be solved for after dealing with the amazing amount of brain damage in the marketplace. But then there’s the matter of proofing up that one party can complete the transaction with the other. In the scenario of Letters of Credit, I’ve found it very difficult to get buyers to show proof of funds with an LC.

This isn’t even the real issue. The post above states that escrow is a great equalizer. With escrow, you’re dealing directly with the buyer who is providing a third party their corporate documents for review. Once reviewed, a holding escrow is opened for any given term period. Funds can flow in over and over again for multiple transactions. Buyer and seller are fully vetted. I know if I was buying $100,000,000 of biomass and I went to the trouble of getting a letter of credit, and then found out the law firm I’m in contact with is a broker who released my LC to someone who then released it to 5 others and so on, I’d be pissed. By the time my LC reached anyone credible, it would have reached them 30 times and pretty soon a company in Columbia would be calling my bank to verify funds possibly flagging my account for review.

LCs are great tools. They have made me a lot of money. If two reasonable counterparties were in play at all times and you were certain you could trust each side, that is a great way to transact. This topic is worth the time spent talking about it. these are both great options. I personally prefer escrow because the bank we work through will proof funds without funds needing to be moved through a portal for exchanges funds multiple times from doing something one time. Escrow acts as a buffer to the banking institution so that the bank doesn’t have to get calls from someone throwing out buzz words

email me at and we’ll talk more about your needs