Marijuana Dispensary Loans: Funding Options for Established Businesses

marijuana dispensary loans

Marijuana Dispensary Loans: Funding Options for Established Businesses

Growing a business is never an easy task. But when you operate a cannabis business, you face challenges unique to your industry. Traditional lenders won’t be a funding option to expand your business. But many specialized lenders provide dispensary loans to help you scale your business.

What Are Marijuana Dispensary Loans?

As the name suggests, dispensary loans are a type of loan that can be used to launch, maintain or expand a cannabis dispensary. The business loans can be used to fund business expenses that range from:

  • Commercial real estate
  • Inventory
  • Equipment
  • Operating expenses/working capital

For existing businesses, a dispensary loan can provide the funding you need to purchase a new product line, upgrade your equipment or implement a new marketing strategy. 

Dispensary loans are typically given in the form of term loans, which means you’ll receive the funds you need in one lump sum, then repay the loan along with any interest according to a predetermined payment schedule. 

The exact interest rate and loan terms are set by the lender, which is why it’s important to compare cannabis lenders before committing to a loan.

What Sets Cannabis Loans Apart From Others?

Even though recreational cannabis is now legal in 23 states and Washington, D.C., banks and other traditional lenders have been slow to offer small-business loans to cannabis businesses. But that only creates an opportunity for cannabis lenders to offer a unique dispensary loan

Because of the legal restrictions that surround the cannabis industry, dispensary loans tend to have higher interest rates than other traditional loan types. But the advantage is that cannabis lenders understand the challenges cannabis business owners face and can work with you to provide the funding you need. 

Ultimately, this gives you access to funding when other lenders give you the brush-off. And for growing businesses, cannabis lenders can connect you to the funding you need for cannabis-related business expenses.

Common Types of Dispensary Loans

Not all cannabis loans are created equal. You can match your dispensary loans to your specific business needs. Here are some of the most common types of cannabis business loans.

Working Capital

Working capital loans provide the funding you need to maintain your day-to-day business operations. This can include things like:

  • Utilities, rent and other short-term bills and expenses
  • Sales and marketing
  • Wages
  • Short-term investments

A working capital loan isn’t designed for long-term growth, but it can provide the necessary cash flow to keep up with your ordinary transactions. 

For growing businesses, this also means that your working capital funding will alleviate pressure on your long-term savings, giving you an immediate source of cash to draw from so you can leave your long-term assets untouched.

Equipment Financing

An equipment financing loan can be ideal for dispensary owners looking to purchase new point-of-sale equipment, office computers and more. 

For example, as you grow you might need a dedicated workspace to handle your administrative tasks. You can use an equipment loan to purchase computers and other office equipment — even additional office furniture.

Growing dispensaries might also use an equipment loan to augment their point-of-sale equipment, and some lenders let you use equipment loans to fund HVAC systems or other major machinery to improve your retail environment. 

Depending on your lender, you may need to specify your intended expenses, but you should have no problem in securing cannabis business loans for these common needs.

Inventory Financing

While some types of working capital loans can cover inventory, some lenders offer a dedicated form of inventory financing. An inventory financing loan can be used to purchase additional inventory, which makes it ideal for cannabis business owners who anticipate a period of increased sales volume.

Existing cannabis businesses might also consider an inventory financing loan to expand their product lines, either by upgrading their existing inventory or by acquiring new products. Inventory loans help your business stay fresh, which keeps your customers coming back rather than migrating to your competitors.

Real Estate Loans

Real estate loans can be used to purchase or upgrade a cannabis retail business. When you first launched your cannabis business, you may have used a real estate loan to purchase your commercial space. Now that you’re growing, you might consider real estate funding to purchase new retail locations and open multiple storefronts in your community.

But real estate loans are not restricted to purchasing new property. This type of business financing can also be used to pay for remodels and upgrades. Keep in mind that these loans tend to be a larger amount than other loan options — that’s all the more reason to compare lenders to find the best rates and terms.

AR Financing

Accounts receivable (AR) financing is a specialized form of business financing that lets you obtain a loan or business line of credit using your unpaid invoices as a form of collateral.

AR financing gives you quick access to cash that can be used for a variety of purposes, not unlike working capital loans. This is also a great way to avoid taking on excess debt because your accounts receivables serve as collateral and keep interest rates low. 

But the loan amount tends to be limited based on the volume of your past invoices. AR financing is also not a wise choice if you struggle with a lot of unpaid invoices, which means that you may not be able to access a large amount of funds.

ERC Bridge Loans

The Employee Retention Credit (ERC) enables businesses to cover payroll, but the credit itself isn’t received until the IRS processes the claim. This means that cannabis business owners still have to pay their employees and only later collect the ERC. 

A cannabis bridge loan will basically serve as an advance on this money, and you’ll repay the loan (with interest) once you officially receive the credit.

This is a great way to gain quick access to funds to cover one of your biggest operating expenses: payroll. But remember that you’re attaching interest charges when you pursue a bridge loan. Make sure you compare lenders so you’re getting the best possible deal.

Why Choose Canna Business Resources as Your Cannabis Financing Solutions?

Canna Business Resources understands the challenges facing cannabis business owners. If you’ve been struggling to find funding through traditional small business lenders, you can always turn to a company that specializes in lending options for the cannabis industry.

At Canna Business Resources, you’ll find dispensary loans, equipment loans, working capital loans and other funding types to help you fuel your business growth. And working with a company that is focused on the cannabis industry can give you guidance on how to make the most of your expanding business.

Cultivating Your Business

The seeds of your business were planted on the day you opened your doors. Now that you’re growing, you need access to additional capital to cultivate the future of your business. Dispensary loans empower you to reach your full potential as a business leader and succeed in today’s growing cannabis industry.

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Frequently Asked Questions

Q: Can you get a business loan for a dispensary?

Yes. While banks and traditional lenders don’t typically offer cannabis loans, you can still find dispensary loans from a dedicated cannabis lender.

Q: How do you get a business loan for a dispensary?

To obtain cannabis funding, you must apply for a business loan from a cannabis lender. Lenders expect to see your business plan and review your financial history, but you can receive funding for a variety of business needs.

Q: Are dispensary loans easy to get?

Yes and no. On the one hand, they’re not as easy to get as other forms of business financing because of regulations that surround the cannabis industry. But a dedicated cannabis lender will understand your requirements and provide access to the capital you need to grow.

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