How to get funding for your cannabis business in 2018

Want to expand your cannabis business? Find out your multiple funding options.

A lot of controversy in the cannabis-based business makes it nearly impossible to get a business loan from a traditional bank. Although cannabis products are legal in many states, it’s still prohibited to buy, sell or use them on a federal level. The FDIC considers any bank willing to work with a cannabis-based business is taking on an existential risk with potentially negative consequences to the public and in violation of federal law.Because marijuana is considered a Schedule I drug by the US Drug Enforcement Agency (DEA), banks choosing to provide loans to businesses associated with the drug could be subject to prosecution. They could also be liable if they lend to a business that breaks state law by selling to a minor or transporting cannabis across state lines.

These risks make it all but impossible for you to get a business loan from an FDIC-insured bank and puts your business at risk of federal government shutdown.

However, that doesn’t mean you don’t have options for funding a business in this budding industry. As states continue to pass laws regulating the use and cultivation of marijuana, new ways of getting your business the financing it needs are opening up. We take you through your options in the US.

Is my cannabis-based business eligible for a loan with Get Funded 9-1-1?

Our qualifications make it easy for you to get funding.

  • You need to be in business for at least 6 months.
  • Your FICO credit score can be as low as 500.
  • You can apply for up to $250,000 the first time, then apply for as much as $4 million.

What can I use a cannabis business loan for?

Cannabis business loans are a lot like other loans: You can use them to cover almost any cost related to your business. Here are some common expenses cannabis businesses can use a business loan to cover.

  • Cannabis business license fees. Starting a new business? You’ll need to get a business license to register your business with local authorities and you may also need to get a state tax license. These costs as much as $78,000 a year, depending on what type of business you’re planning on starting (grow houses can be expensive).
  • Growhouse costs. Setting up and maintaining a growhouse is expensive — you have to have a strong grip on the indoor climate to get the best product. According to Marijuana Business Daily, starting an indoor growhouse can cost $75 per square foot.
  • Dispensary costs. Running a dispensary can come with daily recurring costs that your business might not be able to afford when it’s just starting out — and might benefit from opening a line of credit.
  • Hiring new staff. Bringing new people onboard can up productivity and future revenue — but you’ll need to be able to pay their salaries first.
  • Paying for equipment. Many cannabis business lenders offer options for leasing or buying new equipment that you need to keep things running smoothly.
  • Utilities. Growhouses especially might want to consider taking outa line of credit or business loan to cover those high electricity costs.
  • Rent, land or real estate costs. You’ll need a place for your business to operate. A cannabis business loan can help you rent, buy your first piece of real estate or even expand.

Getting a Loan Verses Getting an Investor

We are a debt company. We are not an equity company. Our business provides only loans. In my opinion, finding an investor for most people can be very difficult. You would have to position your cannabis business to be in favor of the investor. Most investors want to see how much of your own money have you put in before they want to consider doing business with you. And if an investor decides to invest, the investor will appropriately own part of your company.

Crowdfunding might be a good option for getting seed money for a new cannabis business. But once it matures, you might want to look into other investment opportunities. One area you might want to look into are cannabis-focused hedge funds like Poseidon Asset Management and Navy Capital, which pool money from interested investors to fund your business. Other investment sources include family offices, angel investors, and venture firms.

Typically, you’ll need to provide a lot more documents than a business loan and how long it takes to get your funds can be unpredictable. Be prepared to submit a business plan, pitch deck, financial projections and more. It also helps if you can present your pitch in a video or other form of media that’s easy for investors to quickly go over.

Getting a loan is a lot easier when working with private lenders like us. We don’t own any part of your business and you pay back a set percentage of whatever income you generate. There are no personal guarantees and it is an unsecured loan. Then you can continue coming back for more funding as your business grows. Bottom line – get your cannabis business funded! If you get an investor also get a loan to fill in the gaps.

Schedule a time to chat and I will work hard on getting your cannabis business funded.

 

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