Cannabis business loans

Why will most banks not make cannabis business loans?

Because cannabis is a controlled substance under federal law, and a federally insured bank that lends to a business selling it takes on compliance risk and a loan it may not be able to enforce. Federal guidance lets banks hold deposits for licensed cannabis businesses with heavy reporting, and some do, but far fewer lend.

The SBA goes further: its rules exclude direct marijuana businesses and businesses that earn revenue from serving them, so SBA loans are off the table for a grower, processor or dispensary no matter how clean the books are. Federal rescheduling has been debated for years; until the law and the SBA rules change, plan around private money.

Who actually lends to cannabis businesses?

Five groups, roughly in order of how often they fund.

• Specialty cannabis lenders and private credit funds making term loans and lines to licensed operators, typically $250,000 to $20 million, secured by the license, equipment, real estate and a personal guarantee.
• Equipment lenders financing lights, HVAC, extraction and packaging through equipment financing or a sale leaseback of equipment you own.
• Real estate lenders making commercial real estate loans against the building, at loan to value ratios of 50% to 65%.
• Revenue based funders sizing a dispensary business loan off daily sales, the fastest and most expensive option.
• Sellers on an acquisition, who often carry a note.

Our lender directory marks which lenders take cannabis files.

What do loans for cannabis businesses cost?

More than the same loan in any other industry, because the lender pool is small and the risk is higher. Typical pricing at the time of writing: specialty term loans at 12% to 25% APR with 2% to 5% origination, equipment financing at 12% to 25% APR over three to five years, real estate loans at 10% to 16% with large down payments, and revenue based advances at factor rates of 1.2 to 1.5, which can mean an annualized cost well above 50%.

Terms are short, two to five years, and most lenders want a personal guarantee and a lien on the license where state law allows. Read APR versus factor rate before comparing an advance with a term loan.

Do hemp business loans work the same way?

No, hemp is easier. Hemp has been legal federally since the 2018 farm bill, defined by a very low level of the intoxicating compound, so banks, equipment lenders and the SBA can lend to a hemp farm, processor or maker of hemp derived products. Some friction remains: some banks lump hemp in with cannabis, product rules differ by state, and lenders remember the crash in hemp biomass prices, so they look hard at your buyers and margins.

Treat hemp as an agriculture or manufacturing loan with a compliance folder attached, and start with agriculture loans or SBA 7(a) loans for the cheapest money. Ancillary businesses that do not touch the plant, such as software, packaging and security, can usually use ordinary loans too.

What documents will a cannabis lender ask for?

Your state license and its standing come first; a lapsed or provisional license stops most files. Then:

• Six to twelve months of business bank statements from a bank that knows it is banking cannabis
• Profit and loss and balance sheet with federal taxes shown, since section 280E leaves cannabis businesses paying tax on gross margin
• State tracking and compliance history, including any violations
• Ownership table, since owners above a set share are vetted
• Lease or deed, and the landlord's consent to cannabis use
• Equipment list with invoices, or the purchase agreement for an acquisition

A cash business with no bank account is close to unfundable; a cannabis friendly bank account is the first step. The general list is in what you need to apply.

Cannabis loans in Canada, and how to apply

Cannabis has been legal federally in Canada since 2018, which removes the legal barrier but not the caution. The big banks still mostly avoid licensed producers and retailers, while BDC, some credit unions and private lenders do lend to them, so the market is wider than in the US but still thin and expensive.

In both countries, apply once here with your licenses, bank statements and financials and your file reaches the specialty, equipment, real estate and revenue based lenders that accept cannabis. You can also ask your AI assistant to apply for you through our MCP server, as described in the agents hub. It is free to the business.