How to Secure Financing to Grow Your Ohio Cannabis Business

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Contributor, Benzinga
February 22, 2023

Various financing options are available for cannabis businesses in Ohio. With the passing of the Ohio Medical Marijuana Control Program, the state has become more open to the idea of allowing medical marijuana operations. But financing still remains a struggle. Because cannabis is illegal on a federal level, traditional banks can't offer business loans. 

Some nontraditional lenders provide specialized cannabis business loans in Ohio. These lenders usually offer short-term capital with flexible repayment terms to quickly access the funds you need to grow or expand your business.

Can You Get a Cannabis Business Loan in Ohio?

You can get a cannabis business loan in Ohio, but it likely won’t be from a traditional bank or credit union. You’ll need to go through a specialized lender if you want cannabis financing in the state of Ohio. These lenders are industry experts and know the ins and outs of Ohio laws and federal regulations. 

Ohio Financing Options for Cannabis Loans 

Cannabis lenders usually offer several financing options — some secured and some unsecured to help you meet your scaling goals. 

  • Line of credit: A line of credit for cannabis businesses provides access to a predetermined amount of funds that can be drawn upon as needed. Unlike a traditional loan, which provides a lump sum of money, a line of credit allows a business to borrow money as needed, up to a certain limit. Interest is paid on the funds that have been used.
  • Equipment loans: An equipment loan for cannabis businesses is a type of financing that provides businesses with the funds they need to purchase equipment and machinery necessary for their operations. This type of loan is typically secured by the equipment being purchased and is used to finance capital expenditures such as growing equipment, processing machinery, laboratory equipment and other essential items.
  • ERC bridge loans: This loan is an advance on a business’s Employee Retention Credit (ERC). Because it can take several months for the IRS to approve this credit, lenders provide bridge loans to give cannabis companies immediate access to those funds. The loan is meant to provide temporary funding until more permanent financing is secured,
  • Real estate loans: A cannabis real estate loan is a form of financing that allows individuals and businesses to purchase or lease buildings, land and other real estate specifically for use in the cultivation or sale of cannabis. The loan can also be used for related expenses such as construction and remodeling costs. Cannabis real estate loans are typically short-term bridge loans with higher interest rates than traditional mortgages.
  • Dispensary loans: A cannabis dispensary loan offers access to capital to grow or expand a cannabis dispensary. With a cannabis dispensary loan, borrowers can receive large sums of money with reasonable interest rates and flexible repayment terms. Dispensary loans can be secured or unsecured and are typically tailored to the specific needs of each borrower. 
  • Working capital: Working capital provides cannabis companies with the funds needed to invest in essential business needs and initiatives. 

5 Steps to Getting Financing for a Marijuana Business in Ohio

Getting financing for a marijuana business in Ohio is a straightforward process. 

Find a Financial Institution That Offers Cannabis Loans in Ohio

To find a direct cannabis lender in Ohio, you can start by researching online and reading reviews from other businesses in the industry. You can also reach out to trade organizations, such as the National Cannabis Industry Association, for recommendations.

When shopping for a lender, it's important to compare the terms and conditions of each loan option and to consider factors such as interest rates, repayment terms and any fees associated with the loan. You should also carefully review the lender's experience and track record working with the cannabis industry, and make sure they are familiar with the specific regulations and laws in Ohio.

Find Out Financial Qualifications Lender Requires

Different lenders have different qualifications for existing businesses seeking a loan or line of credit. When researching potential lenders, it is important to understand what type of assets or collateral they require as part of the application process. Understanding this information ahead of time can help you make sure that you meet all the necessary qualifications and get approved for a loan more quickly. 

Decide on Your Operational Business Needs

When starting or expanding a cannabis business, it's important to carefully consider your operational business needs to ensure success. This involves evaluating your current equipment, facilities and workforce, and determining what you need to meet the demands of your business. Do you want to purchase land to expand? Are you waiting on your ERC and need some cash until your tax return is processed? 

The operational needs of your cannabis business will depend on your specific goals, the size and scale of your operations and the challenges you face in your market. By carefully evaluating your business needs, you can make informed decisions about how to best invest in your operations and ensure long-term success.

Pick a Loan to Serve Your Scaling Needs

Once you have determined what your business needs are and have identified potential lenders who meet those needs, it’s time to pick a loan that is most suitable for your scaling needs. Depending on how quickly you want to scale up your operations, there are many types of loans available with varying repayment periods such as short-term loans, medium-term loans, and long-term loans. It’s important to evaluate each option carefully before deciding which type best fits your company’s goals as well as budgeting capabilities. 

Get Funding for Your Ohio Marijuana Business

After going through all the steps above, getting funding for your Ohio marijuana business should be relatively straightforward provided you meet all necessary qualifications set out by lenders or financial institutions offering cannabis loans in Ohio. It is recommended that those seeking financing do thorough research into all available options before making any decisions to ensure the best possible outcome when applying for a loan or line of credit.

Ohio Laws to Consider with Cannabis Business Lending

Marijuana is illegal federally, which is why banks don’t offer loans to businesses in this industry. But there may be some changes in the future for Ohio. 

Ohio Marijuana Banking Bill 

The Ohio Marijuana Banking Bill is a proposed bill that seeks to address the problems faced by businesses in the cannabis industry. This bill would enable financial institutions to provide services to those working within the industry without fear of federal prosecution or sanctions. If passed, the bill would authorize banks and credit unions to accept deposits from dispensaries, process payments between buyers and sellers and provide loans to cannabis-related businesses. 

Basically, the bill would make financing easier. Getting a loan from a direct cannabis lender to scale your business before Ohio makes it easier to get loans from traditional institutions can give you a competitive edge.

Cannabis-Specific Lenders

Using specialized cannabis lenders to scale your business is an effective way to access capital in a timely and cost-efficient manner. Businesses looking to grow their operations or invest in new projects can benefit from the various types of loans and financing options these lenders offer. From working capital loans to ERC advances and bridge loans, cannabis-specific lenders have financing to meet your needs.

Frequently Asked Questions


What steps do you need to take to get financing for your cannabis business in Ohio?


To obtain financing for a cannabis business in Ohio, there are several steps to take. First, determine your business needs and goals. Next, research and identify lenders. Then you can compare the financing options they offer and check to ensure you meet the eligibility criteria. Contact the lender directly to learn more about its specific application process.


Does Small Business Administration finance cannabis?


The Small Business Association (SBA) does not finance cannabis businesses. This is because cannabis is an illegal substance according to federal law, and any funding that the SBA provides would be in violation of existing U.S. laws.


How much does it cost to own a dispensary in Ohio?


The cost to own a dispensary in Ohio varies depending on location, size and type of business. Generally speaking, startup costs for dispensary owners in Ohio range from $250,000 up to $1 million or more.