how to fund a cannabis business

Recreational and medical marijuana are now legal in many parts of the United States, sales are continuously increasing, and there is no foreseeable slowdown. Opening a cannabis dispensary can be a wise choice for some individuals who are interested in becoming part of this new and upcoming industry. There are several factors, including the high cost of starting up a cannabis industry, that must be considered before making this major decision.

Cannabis entrepreneurship can be costly because it is nearly impossible to finance the money to open a cannabis dispensary through a federal bank. Traditional financial institutions will not knowingly give money to businesses in the marijuana industry to avoid the risk of legal repercussions and other uncertainties.

There are other financing options that are available to finance a cannabis dispensary. You must ensure that all money that is handled and secured is done so legally. Illegally opening a cannabis dispensary is not worth the likely risk of the great financial losses that would ensue. The following informative article will examine how to legally finance a cannabis dispensary.

Why Banks Will Not Finance a Cannabis Dispensary

do banks fund a dispensary business

The first thing that those interested in opening a dispensary must do is contact an attorney who specializes in the cannabis industry. There are numerous laws, specific to each region, that must be adhered to in order to open a dispensary.

The reason that banks will not finance the funds to open a business in the marijuana industry is that marijuana is still considered a dangerous, illicit, and illegal drug on a federal level. Although this bears no truth, this is still the legality of the matter, making it a high-risk endeavor for investors.

Costs of Opening a Cannabis Dispensary

Costs of opening a dispensary

Opening a cannabis dispensary is an expensive venture that will vary greatly depending on the location. You must create a business plan that accounts for several cost factors, including:

  • Attorney Fees
  • Licensing Fees
  • Leasing Property
  • Marijuana Inventory
  • Employees

There are ways to obtain these funds, but you sure ensure that you have secured the funds needed before proceeding.

How to Obtain Cannabis Funding

how to fund a marijuana business

The majority of those who have opened marijuana dispensaries had to spend a substantial amount of money out of pocket; therefore, you must be certain that you can pay for all costs associated before committing.

Although federal banks will not finance loans for cannabis, there are some private lenders who are willing to fund the cost of opening a dispensary. This is easier to acquire in states that have legalized marijuana for recreational use.

Some private lenders are willing to approve individuals for a medical marijuana dispensary loan in locations where recreational use is not yet legalized.

Some private lenders will approve individuals who are seeking to open a cannabis manufacturing facility. This is where marijuana is cultivated and sold to dispensaries.

Before Speaking with a Lender

As with any loan, lenders are more likely to finance a project that seems promising and likely to generate revenue. It is important to plan out your finances before meeting with a lender to discuss this large investment.

It is a wise idea to meet with a financial advisor to be sure you have created a thorough financial plan for your potential business. This will include all of the aforementioned costs, as well as other business-specific elements, including processing equipment, marketing budgets, and permits.

You must know ahead of time how much money you will be able to contribute to this business venture and how much money you will need to finance. You are more likely to be approved if you only need to borrow the funds for your marketing budget, rather than finance all the money needed to start your business.

Selecting the Right Lender

At this point, you should be aware of how much you can contribute out of pocket and how much you will need to finance. Now you must complete the research necessary to choose a reputable cannabis loan lender. You will want to find a lender who specializes in the marijuana lending industry. Read reviews from fellow entrepreneurs and shop around for the best rates.

Other Important Information

what to consider before opening a dispensary

If you are wanting to open a cannabis dispensary there are several other legalities that must be aware of before committing to this investment. First, and foremost, find a lawyer who can help you navigate the laws regarding marijuana sales in your area to ensure that you comply with every aspect of the law.

In addition to financing the funds, there are also several other key factors you must consider before opening your medical marijuana dispensary, including:

  • Location- This includes the laws of opening a dispensary in your specific location of interest. Your lawyer should help you determine the specific laws regarding the distance that the property must be from schools, churches, etc. before proceeding.
  • Lease- You must inform the individual from which you are leasing commercial property of your intent to use it for a cannabis dispensary. Too often this is not mentioned and can result in negative consequences. Not all landlords are comfortable with the cannabis industry and you need to ensure that you find one who is.
  • Market- You must also consider whether there is a market for marijuana in the area by observing the public views of marijuana. Examine other cannabis dispensaries in the area to evaluate the competition.

Opening a cannabis dispensary can be a wise investment for many driven entrepreneurs who are passionate about marijuana. If you feel that you are driven, can contribute funding, and are willing to set up a business plan, then you are likely to succeed in this growing industry.

Contact Paybotic Today

Dispensary payment processing software

Paybotic provides new marijuana dispensaries with all the tools and services they need to offer their customers premier payment solutions. Paybotic is the leader in cannabis payment processing for its reliable services and competitive pricing.

Reach out to Paybotic today for more information about their electronic payment services for your start-up or established business.


Post date: 9/3/2021
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