Can I Get Financing for My Cannabis Dispensary?

The short answer is yes, you can access financing for your cannabis dispensary! There are multiple options depending on your project and aspects of your borrower profile. We will walk through various programs to help you key in on the most likely path to finance your dispensary.

Are You Purchasing a Building for Your Cannabis Dispensary?

Cannabis dispensary real estate financing is available from traditional and private lenders. Depending on where you are in the business life cycle you might be able to access credit union or bank financing, private money or had money to purchase a piece of real estate.

When it comes to cannabis real estate, brick and mortar rules but metal and concrete structures are OK. Urban areas or urban adjacent are the most attractive collateral. Other less populated locations can be OK but if you are too rural your borrower profile will need to be strong.

Loan to value can range from 50% for asset based lenders to 65% for traditional lenders up to 75% for private money lenders. The value used will be commercial use value, not cannabis use value, so if you order an appraisal or broker price opinion be sure to ask them for both values.

Terms range from one to three years interest only, to ten or fifteen year principal and interest, sometimes with rate adjustments every five years.

What if I Don’t Own my Dispensary Building?

If you are in a situation where you don’t have collateral but need financing for a renovation, operations, inventory or other business uses you’d need unsecured capital financing for your cannabis dispensary, which for a business is usually reserved for cash flowing entities with certain minimum monthly revenue generated. 

Are You Revenue Generating with No Collateral?

In the event you are revenue generating, there are a variety of options that all fall under that category of working capital. Most common is revenue based financing where a lender will advance you a certain percentage of your monthly average revenue. They will want to see consistent or growing revenue and understand the growth impacts of the financing used to ensure future debt service. These cannabis loans are usually short term in nature, with 6 to 12 months being the average window for repayment.

Keep in mind, unsecured capital is at the higher end of the cost spectrum, so be sure the opportunity cost outweighs the cost of capital in a way that makes sense for your cannabis dispensary.

Are You Pre or Early Revenue with No Collateral?

If you aren’t revenue generating but the owners are deriving an income from somewhere there may be an alternate unsecured cash term loan available. 

These take the business and use of funds out of the equation and look solely at each individual applicant’s credit, income and debt to determine if there is an amount that you could reasonably afford to pay back. 

The upside here is these offer a five to seven year repayment term with no prepayment penalty, no restrictions on use of funds and no liens or covenants on your business or what you use the money to purchase. If speed, flexibility and length of repayment term matter, this is where this cannabis loan program shines.

Can You Finance a Dispensary Purchase?

There are financing options for dispensary purchases. This usually works best if an established company is purchasing the cannabis dispensary. Individuals can qualify but would need to bring financial strength and cannabis acumen to the table. 

Much of what is available depends on if there is collateral involved or not. Valuations may vary between seller, buyer and the lender. Generally speaking lenders are comfortable at around 50% loan to purchase price so be ready to bring the rest of the required capital to the purchase unless additional collateral is available.

How Can I Find Out if My Dispensary Qualifies for a Loan?

That is where we can help! We work with a variety of traditional, private money and hard money lenders and can help you determine what programs you might qualify for and what the range of rates and terms may look like.

Contact us today to schedule your no-obligation discovery call.