• With cannabis and especially medical marijuana becoming legal in many places across the U.S., the marijuana industry has become a popular option for entrepreneurs looking for new business opportunities. 
• Cannabusiness opportunities, like new dispensaries and cannabis shops, are opening up every day. 
• Because cannabis is not yet legal at the federal level, these companies are considered “risky” by most traditional financial institutions, and it can be difficult to get cannabis business loans.
• If you need working capital to start your marijuana business, there are many financing options available for cannabis companies.
• Read on to learn about business financing options for cannabis shops.

There Are Many Financing Options for Cannabis Dispensaries on the Marketplace

The cannabis industry is expected to double in size by 2027. Cannabis business owners, like those who own marijuana dispensaries and companies that sell cannabis products like edibles, CBD, and delta-8, are having to figure out how to fund their new enterprises. Without federal legalization, marijuana business owners may have difficulty securing financing solutions for commercial real estate, cash flow management, inventory purchasing, payroll, and other business needs. 

While it can be difficult to get small business loans from traditional banks or credit unions for cannabis businesses, including those that sell cannabis products, CBD products, or THC, it’s not impossible to find cannabis financing. As with other businesses considered “risky” by banks, there are alternative business funding options available if you need loans for a cannabis dispensary or other cannabusiness.

The number one way to make sure you qualify for any type of financing is to make sure that you have at least a good personal credit score and, if you can, good to excellent business credit. It’s a great idea to learn how to establish business credit and improve it over time to make you more attractive to lenders. 

Here are some of the options available to borrowers looking for cannabis shop loans.

Private loans

While traditional small business loans like term loans may not be available to cannabis companies, there are many private lenders willing to invest in the opportunity. There are several companies that will set you up with investors who are interested in giving cannabis companies private loans. You may also try getting loans from friends or family, or use crowdfunding to raise money for your business. 

Alternative lenders

If you can’t get a traditional bank loan, alternative lending may be a good option. These lenders are not banks and tend to be fully online. They provide short-term business loans, business lines of credit, merchant cash advances, or other forms of financing to businesses that may not qualify for traditional loans, like those with lower credit scores or riskier lending profiles. Usually their application processes are shorter, simpler, and fully online. However, their loans or other types of financing may be more costly, coming with higher interest rates, shorter repayment terms, and other restrictions. 

Working capital loans

A working capital loan is a relatively fast and easy loan that can help you get a quick influx of cash, and usually doesn’t require collateral. They tend to have flexible repayment terms, although they may have higher interest rates. Also, getting a working capital loan can ding your credit, so be cautious. 

Real estate loans

If you need commercial real estate, a loan is probably your best option, but many lenders are hesitant to lend to marijuana-related businesses (MRBs) due to cannabis’s federal legalization status. One way around this may be a real estate investment trust (REIT), as this reduces the risk of federal investigation. Usually this type of arrangement includes a sale-leaseback structure, but traditional mortgages are also not out of the question. 

Equipment financing

Another type of financing that may be available to a cannabusiness is equipment financing or leasing. Often you can use the equipment as its own collateral, so if you need manufacturing, distribution, or sales equipment, this could be a good option. It’s important to note that money you get from an equipment loan or lease can only be used on that equipment, so you can’t use it to buy property or inventory, for instance. However, it could help you free up some cash flow to pay for other operating expenses. 

Business credit cards

While they’re not a traditional loan, business credit cards can be another way to purchase equipment, inventory, or other daily necessities for your business and help improve your cash flow. Some cards can also help you build credit, which is always a good call. Beware that the annual percentage rate (APR) can be much higher than interest rates on other types of financing, so it’s a good idea to keep your usage level low or pay off as much as you can every month.  

Cannabis Shops Can Use Loans to Invest in Equipment

Different types of cannabis businesses can use business financing to invest in equipment, including:

• Farming equipment for growers
• Manufacturing equipment
• Equipment for distributors, such as scales, packaging machines, and even trucks or delivery vehicles
• Sales equipment like display cases, point of sale machines, registers

Cannabis Shops Can Use Loans to Meet Payroll

Payroll can be one of the biggest expenses for any small business. You need good cash flow to ensure that paychecks can be cashed the day you issue them. Getting a payroll loan can be helpful to make sure that you have the cash in the bank when you issue paychecks. This can also help you increase cash flow for unexpected costs or other operational business expenses.  

Cannabis Shops Can Use Loans to Invest in Inventory

As with other businesses, cannabis shops can use loans to stock up on inventory, such as:

• Packaging
• Cannabis stock, including flowers, edibles, vape cartridges, etc. 
• Cannabis paraphernalia, like vape pens, pipes, rolling papers, etc. 
• Merchandise like tee shirts and hats

It’s important to purchase from registered growers or distributors to ensure that you are following all local and state regulations. 

Are There Any Requirements or Restrictions on Cannabis Dispensaries Getting Loans? 

There are restrictions on traditional banks lending money to cannabis-based businesses, because marijuana and related products are still Schedule 1 drugs and are not federally legalized. Credit unions and traditional banks that are FDIC insured or federally regulated may have difficulty getting or keeping insurance if they lend to MRBs. 

Does FNMA Allow Income From the Cannabis Industry?

If you’re employed by a MRB or cannabis shop, you will not be able to secure a federally-backed mortgage for a home if your sole source of income is from a cannabis-related business. This includes FHA, VA, or USDA mortgages. However, the Federal National Mortgage Association (Fannie Mae) does offer home loans to W-2 employees or 1099 employees of cannabusinesses, as long as they are less than 25% owner or are not a C-suit member. 

What Is the Cost of a Business Loan For a Cannabis Store? 

The cost of loans for a cannabis dispensary depends on a number of factors, including:

• Your personal and business credit scores
• How much you want to borrow
• What you intend to use the money for
• How long you’ve been in business
• Which lender you go with
• The length of the repayment terms

Nav can show you your best options for financing your cannabis business by taking data like your credit, your business, and your annual revenue and matching it to the offers you’re most likely to qualify for. Sign up for your account today to start seeing your options. 

Who Are the Best Lenders for Cannabis Shops?

There are several lenders who may be able to help you fund your cannabis shop. Always check with the lender to find out what type of financing you qualify for.

Green Leaf Money 

Green Leaf Money helps cannabusinesses find a bank or lender that will work with them. Their rates can be somewhat low at just under 7%, although they can get as high as 30%. They also may not disclose all of their costs or partners, so make sure you understand the full picture before applying.

Diamond Business Loans

Specifically designed for companies that have had trouble getting traditional business loans, Diamond Business Loans has a program just for MRBs. Their application process is paper-based, and it can take weeks to get your funding, but they do provide personal assistance with the application if needed.

All information about these loan programs has been collected independently by Nav. These offers are not currently available through Nav. To see what financing options are available, please visit your Nav account.

Business Cash Advance by Credibly

Line of Credit by Fundbox

Your financing options will depend on your business’s information. The best way to find out what funding is right for you is by logging in to your Nav account and completing your registration to get personalized options.