Small business is the backbone of America, and new horizons—like the cannabis industry—are ripe for budding entrepreneurs. With that said, however, it can be difficult to secure a loan for many businesses without the stigma that cannabis has from years of unfair legislation.
For people opening a dispensary in legal states, however, the opportunity exists and there are methods to fund your business out there. We've put together some of the best, most reliable ways to find funds for your cannabis business to get you started down a path of thriving entrepreneurship.
If you're in a state where cannabis is only legal for medical distribution, you will find that banks might not want to work with you. A big part of this is because on a federal level, cannabis is still illegal, and so the Feds could prosecute the bank for working with an "illegal" business. This is because banks are FDIC insured, and are subject to federal oversight.
Don't fret, however—there are banks willing to help and more are opening all the time. The point, however, is to not accept the first offer a bank throws at you. Just like any loan, you want the most money at the best rate, so even if the first offer seems like a miracle, don't just jump on it.
As of 2020, Washington, Oregon, California, Colorado, Nevada, Arizona, New Mexico, Illinois, Michigan, Maryland, New Jersey, New York, Rhode Island, Connecticut, Massachusetts, Minnesota, and Washington, D.C have legal cannabis legislation for medical purposes.
For recreational use, Alaska, California, Colorado, Illinois, Washington, Massachusetts, Nevada, and Oregon all allow it.
In states where cannabis is legal recreationally, you will have a much easier time finding a receptive community and lending options.
You want to have a clear business model to present to the lender. They want proof that you've considered the path you're taking, and how you're going to make money to pay them back. Do your research and determine what you'll need:
It's a good idea to get advice from a financial planner before you make the jump to sitting down with a lender.
If you only need equipment financing, make sure that's clear when you request a loan. Likewise, if you simply want a line of credit to buy inventory, that's a totally different request than a long-term loan to fund an entire business. This is why having a clear plan before you sit with a lender is so important.
One of the best things you can do for your startup is to find a lender that specializes in providing funds to cannabis businesses. The process of a loan from a traditional bank can take weeks or months while they gather the necessary information, especially if you're trying to buy or build a new structure for your business.
Our team can get you pre-approved and accurately help you work within the laws and limits of your state's cannabis laws. If you're looking to open a cannabis dispensary and need funding, this is your best option.
You May Also Like:
Posted by Canna Business TeamFacebook
In an industry that is constantly evolving, Canna Business Financing provides business owners with a reliable source to gather the most up-to-date information. From resources to fund the growth of your business to insights on best practices to scale, look no further!