Obtaining finance for any business can often be a big headache for the business owner, especially if the business is at the startup stage. However, acquiring funding for any marijuana-related business is often more complex than securing a loan for a regular business. Acquiring funding for medical or recreational marijuana scales can be a challenging task to overcome, basically because of the legalization issues.
The federal laws governing the United States prohibit the use and sales of marijuana, however, individual states in the United States have different rules and regulations governing the use and sales of cannabis.
The laws make it quite tasking to secure funding for the business either inform of advance credit, loans, grants, or business support at the federal level of government. Moreover, some operating expenses and finances that can help scale the business from one stage to another are quite unavailable as it is for regular businesses.
Although financing cannabis-related business is limited to a few options, there are many other ways cannabis business owners can easily secure loans that can be used to help bring their business up to scale. These methods are only accessible through some specialized credit institutions, governed by the state or individuals. Moreover, Cannabis Dispensary Loan obtained through the financing options available also has some regulations, restrictions, and rules guiding access to the funds.
Read on as you learn about the various options available for you as a cannabis business owner to secure funding and also transform your marijuana business ideas from the ground up.
Challenges Of Marijuana Dispensary Funding
Generally, obtaining funding, loans, or credit for any business is no joke, as you have to find a lender who is committed to supporting your business ideas and propositions. The same goes for the cannabis business as there are so many challenges you can face as a cannabis business owner trying to secure funds for the business, primarily because to secure funding, you must follow some set of rules.
More so, there is limited funding available for the business niche, which makes it quite difficult to assess for most business owners hoping to venture into the cannabis dispensary business.
Once you have successfully identified a lender who is willing to provide you with the required capital for your cannabis business, you would be required to undergo the necessary process of securing the loan which includes proper paperwork which is proof that your cannabis business is qualified to obtain the funding. You must take note that there might be some challenges and itches that could come up while processing the funding opportunities.
The challenges that could come up during the process of securing a Cannabis Dispensary Loan are often dependent on the lender you are hoping to secure funding from. Note the process for securing the cannabis loan could take weeks or even months depending on the availability of funds, processing time, and how organized your business is.
Meanwhile, if you are hoping to secure a marijuana dispensary loan, there might even be more hurdles and complications you might have to scale through which is mostly because of the legalization and licenses that are required to be obtained. Although marijuana is legal in some states, it is still considered illegal under the federal laws of the united states.
With this complication and legality of the cannabis business, most lending organizations often want to avoid any legal issues that might arise while working with cannabis-related businesses. Most often businesses in the cannabis industry are considered high risks which makes it very difficult to operate, obtain loans, or even open savings, checking for merchant accounts for the business. Meanwhile receiving financing through the traditional financial system is impossible for cannabis-related businesses.
Meanwhile, if you are lucky to locate a financial institution that is ready to help open an account for your marijuana business, there are so many associated costs which often include background checking fees, regular reports to the crimes department, and many more stiff rules and regulations.
Can I Secure A Marijuana Dispensary Loan From A Bank?
The bad news is that banks are under the protection of the Federal Deposit Insurance Corporation which is why any bank that works with marijuana business would be violating the federal laws instituted against marijuana and related business.
Such banks risk facing the penalties and possibility of being closed down by the federal government. The risk of working with marijuana businesses includes that of the dispensary marijuana as well. However, instead of taking the risk of getting penalized, the majority of the banks avoid any business relating to cannabis.
Besides, there are also some legal actions banks could face if they decide to work with the cannabis industry. Take, for instance, a bank can be charged with a lawsuit stating that the bank is involved in money laundering, aiding, and abetting crime for accepting deposits of performing financial transactions with marijuana business owners.
Based on his reasons, most of the banks have completely avoided working with marijuana-related businesses, as a way to save themselves from the web of the law. Although in the early months of 2018 a report was released stating that over 400 banks in the United States work with the marijuana business, it is apparent that most marijuana businesses do not have access to financial services that are offered to other businesses in different industries.
The Best Loans You Can Secure For Marijuana Businesses
Since your business is in the marijuana industry in the previous section you would have understood that securing loans from traditional banks and other federally regulated financial institutions is impossible. How do you get financing for your cannabis dispensary business is the big question.
Alternatively, you can secure a financial loan from other lenders who are owned by private individuals, however, they may have some unfavorable terms and conditions which could impact your business activities.
While you might think that obtaining financial support from other lenders can be very much possible, you must be aware that the majority of the lenders are also skeptical about providing loans for marijuana-related businesses.
There are some other ways you can easily secure a loan for financing your marijuana business which include short-term loans that come in a lump sum mainly provided for business purposes. The short-term loan is made available as a business capital that can be used to purchase equipment, hire new employees or get your business running effectively. Other forms of financing can be equipment loans, crowdfunding, and many more.