How to Get Cannabis Loans: A Guide for Business Owners

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Contributor, Benzinga
February 22, 2023

Cannabis is a growing industry. A recent report indicates that global revenue from cannabis businesses is slated to grow from $30 billion in 2021 to $40 billion by 2026 — an increase of 76%. 

If you’re a cannabis business owner, this presents a great opportunity for growth. But to scale your business, you’ll need to access cannabis loans. Here’s how to find the best financing for your cannabis business.

What Difficulties Do Cannabis Business Owners Face When Getting a Loan?

Cannabis business owners face a bit of an uphill battle when it comes to financing. Because cannabis is regulated on a state-by-state level, traditional banks and lenders are reluctant to offer business loans to cannabis companies.

Despite this challenge, a number of private cannabis lenders have emerged to assist cannabis business owners, offering financing that can be used to launch, maintain or grow their businesses.

What Can a Cannabis Business Loan Be Used For?

Cannabis loans can be used for a variety of purposes related to business operations:

  • Obtaining working capital to sustain your business
  • Opening a new dispensary or business location
  • Purchasing new equipment
  • Covering payroll
  • Purchasing commercial real estate

If you operate a cannabis business, you might look into cannabis business loans to expand your operations, introduce a new product line or upgrade your equipment.

That may be welcome news, especially if you live in a state that has recently legalized recreational marijuana. Cannabis loans can help dispensaries tap into this new market and leverage financing to scale their customer base.

5 Steps for Obtaining Cannabis Financing

How do you go about obtaining loans for a cannabis company? The following five steps can serve as an action plan for getting the funding you need.

Step 1: Research Trusted Cannabis Lenders

Because it’s unlikely that your local bank will offer cannabis funding, you’ll have to look into cannabis business lenders. Direct lenders provide services that other lending institutions cannot.

But be careful. Cannabis lenders may take advantage of your limited options by charging high interest rates or slapping on hidden fees. Compare the rates and terms (along with client reviews) of at least three lenders to ensure you obtain the best value.

Step 2: Improve Your Credit Score

Whenever you apply for a loan, the lender will examine your credit history to determine your eligibility. 

While business lenders can look into your business credit score, they might also consider your personal credit score when offering cannabis loans. The highest loan amounts and the lowest interest rates go to those with strong personal or business credit scores.

You can improve your credit score by:

  • Paying your bills on time
  • Requesting a higher credit limit to minimize your credit utilization rate
  • Correcting errors on your credit report

Taking these basic steps can bump up your credit score and improve your chances for a loan.

Step 3: Review Your Business Plan

Many lenders expect to see a written business plan before approving a loan. A business plan commonly includes:

  • An executive summary
  • A description of your products and services
  • Market research
  • A description of your company leadership
  • Financial projections
  • A request for funding

If you created your business plan when you first started your cannabis company, now may be a good time to update it. For instance, your current business plan might reflect your desire to expand, or it may specify how your money is currently being allocated, whether it’s to research, marketing or other business functions.

Step 4: Put Money Aside for a Down Payment

Even though you’re seeking financing for your cannabis business, you may still need money for a down payment. Having money set aside indicates that you have available assets to invest and that you are sufficiently secure to handle a loan.

For business loans, down payments are usually in the range of 10% to 30%. However, this amount is largely at your lender’s discretion, so make sure to compare this requirement when shopping around for cannabis loans.

Step 5: Meet Minimum Requirements

Every lender has different requirements when it comes to loan eligibility. For some lenders, this means meeting a minimum credit score or having a large down payment. Other lenders may prefer to work with cannabis companies with environmentally sound policies or other specific concerns.

The point is simple: Before you commit to a lender, learn as much as possible about its eligibility requirements and other lending terms so that you can increase your chances of being approved for the best loan.

Stable Solutions for a Changing Industry

While the cannabis industry is growing in acceptance, financing remains a challenge. Independent lenders bridge the gap for cannabis business operators, who can use this funding to build or grow their businesses.

If you currently own a cannabis business, consider cannabis funding to expand your operations. More states are legalizing recreational marijuana, and dispensaries are often the first places allowed to sell recreational cannabis. A cannabis loan can help you tap into this new market and deliver a superior level of service to your customer base.

Frequently Asked Questions


Can cannabis companies get bank loans?


Banks and other traditional lenders do not offer loans for cannabis companies because cannabis is illegal only at the federal level. Cannabis companies must pursue funding through private lenders.


Can a cannabis business get an SBA loan?


The U.S. Small Business Administration (SBA) does not provide loans to businesses that grow, sell or distribute cannabis products — or aid in the aforementioned activities.


Can you get a Federal Housing Administration (FHA) loan if you work in cannabis?


Cannabis business owners are not eligible for government-backed loans. This means that you cannot receive an FHA loan, VA loan or USDA loan if your application indicates that you rely on money from a cannabis business.