If you’re involved in the cannabis industry, you may find it challenging to find a lender willing to work with you. Most banks don’t offer cannabis financing because there’s no federal legal protection for financial institutions that work with cannabis-related businesses.
However, that’s what the SAFE Banking Act aims to change. As of September 2023, the Senate Banking Committee approved a bill that would make it easier for banks to serve state-legal cannabis businesses, such as allowing them to open bank accounts and get business loans.
In the meantime, it’s still possible to find funding for a cannabis business, despite federal roadblocks, though you’ll generally need good credit. Count on needing a credit score above 670, though some lenders on our list accept scores lower than that.
In the meantime, it’s still possible to find funding for a cannabis business, despite federal roadblocks. To help you, we’ve narrowed down some top lenders that work with cannabis businesses.
Best cannabis business lenders
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Best for higher loan amounts: Loanspark
Loanspark is a business lending marketplace that connects lenders to borrowers, including cannabis business owners. It does this through its Business Lending as a Service (BLaaS) co-branded partnerships, which helps business owners in the marijuana industry access funds.
Loanspark is licensed in 47 states and offers guarantees on its pricing and same-day loan decisions. While Loanspark doesn’t allow customers to apply for a loan from its website, you can apply for a cannabis loan up to $20 million through our Go to site button.
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Pros
- Direct lender that also works with 78 partners
- Partners include banks, online lenders and private investors
- Offers a wide range of business loans
- Prequalification available
Cons
- Website is not consumer-facing
- Limited customer reviews
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| Loan amount | $10,000 – $20,000,000 |
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| APR | Starting at 1% |
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| Min. Credit Score | 600 |
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| Requirements | 600+ personal credit score, 3+ months time in business, $100,000 minimum annual revenue, active business checking account required |
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| Loan amount | $10,000 – $20,000,000 |
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| APR | Starting at 1% |
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| Min. Credit Score | 600 |
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Best loans marketplace: GoKapital
The GoKapital marketplace offers two main funding options for cannabis business owners: personal loans and short-term business loans. Its personal loan option offers competitive rates and repayment terms up to five years. To qualify, you’ll need a minimum Experian credit score in the high 600s and at least $50,000 in annual personal income.
GoKapital’s revenue-based business loan is a short-term loan with a maximum repayment term of 18 months. While pricier than the personal loan, you can potentially borrow up to 150% of your monthly sales, and you can pay back the loan early with discounts and no prepayment penalties.
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Pros
- No collateral required
- Relatively low credit score requirement
- Phone support available
- BBB accredited with A+ rating
Cons
- Few customer reviews online
- Rates can run high
- Daily payments may be required
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| Loan amount | $50,000 – $5,000,000 |
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| APR | 6% to 18% |
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| Min. Credit Score | 500 |
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| Requirements | Minimum of $12,500 average monthly revenue. At least four months of business bank account statements. |
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| Loan amount | $50,000 – $5,000,000 |
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| APR | 6% to 18% |
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| Min. Credit Score | 500 |
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Best for loan selection: FundCanna
FundCanna provides funding to the cannabis industry though all levels of the supply chain – from cultivators to distributors to dispensaries. It offers some of the widest range of loans out there, including lines of credit, vendor financing, working capital loans, equipment financing and dispensary financing.
It offers an online application with three steps to help you get started. Approvals take about 24 hours, and if approved, you could have funds in as soon as the next business day. But there’s not much information about rates and fees online. To qualify, you’ll need to fill out the online application or call.
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Pros
- 24-hour approvals
- Many loan types available
- Specialist in cannabis business funding
- Phone support available
Cons
- Rates and fees not listed
- No customer reviews online
- Not accredited by the BBB
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Best for bad credit: United Capital Source
United Capital Source business term loans
United Capital Source is an alternative lender that offers a wide range of financing to businesses in high-risk industries, including cannabis. It requires little documentation, and you might be able to qualify for a loan even if you have bad credit – since there’s no minimum credit score requirement. Instead, eligibility is based on your monthly revenue.
To qualify, you need a minimum of six months in business and at least $10,000 a month in revenue. You can typically borrow up to 80% to 100% of your gross monthly revenue. Instead of charging interest, it uses a factoring program that costs around 20 to 30 cents on the dollar. While expensive, it may work for bad credit emergency borrowing.
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Pros
- No credit score minimum
- Transparent about costs
- Phone support available
Cons
- Not for startups
- Expensive compared to other loans
- Some products have daily or weekly repayments
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| Loan amount | $2,000 – $5,000,000 |
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| APR | Not stated |
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| Min. Credit Score | 550 |
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| Loan term | 24 months to 25 years |
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| Requirements | 550+ credit score, 3+ months in business, $120,000+ annual revenue, business checking account |
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| Loan amount | $2,000 – $5,000,000 |
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| APR | Not stated |
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| Min. Credit Score | 550 |
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Best for fast funding: Canna Business Resources
Canna Business Resources offers a range of services for those in the cannabis industry. It provides quick turnaround working capital, as well as equipment financing, commercial real estate financing, accounts receivable financing and lines of credit.
It offers loans between $50,000 and $15,000,000 and advertises funding in as little as 24 to 48 hours after approval. But you won’t find any information about rates and fees online – and if you have questions, you may need to wait for a call back or email response.
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Pros
- Dedicated cannabis financing resource
- Phone support available
Cons
- No information about rates online
- May have to wait for a call back
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| Loan amount | $50,000 – $15,000,000 |
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| Loan amount | $50,000 – $15,000,000 |
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Best for real estate loans: Diamond Business Loans
This California-based lender works with both direct and indirect marijuana businesses for a range of financing needs. It offers unsecured working capital loans, startup funding, equipment loans and real estate loans from $25,000 to $150,000, which can be used to purchase cannabis businesses.
Its rates are competitive compared to other cannabis business lenders. But as with most lenders that serve the cannabis industry, you’ll need strong financials to qualify. Approval is mainly based on your financial history, so you may want to look elsewhere if you have fair or bad credit.
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Pros
- Rates based on personal finances
- Relatively low starting APR
- Application assistance
Cons
- No online application
- Turnaround of a few weeks
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| Loan amount | $25,000 – $150,000 |
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| APR | 5.9% to 19.99% |
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| Min. Credit Score | 680 |
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| Loan term | 12 to 60 months |
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| Requirements | 680+ personal credit score, no late payments or bankruptcies |
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| Loan amount | $25,000 – $150,000 |
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| APR | 5.9% to 19.99% |
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| Min. Credit Score | 680 |
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Best for customer service: Finance Factory
Finance Factory business loans
Finance Factory is a loan connection service that has earned recognition for customer service by LendingTree. It works with high-risk businesses like cannabis and offers a few types of funding for cannabis business owners: lines of credit, personal loans and term business loans with longer repayment terms.
But to qualify, you’ll need a minimum credit score of 700 from all three credit bureaus, documented income and ideally, two years in business. And it’s not the quickest option. Personal loans can take up to two weeks for funding, and business loans can take anywhere between 10 and 30 days.
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Pros
- Low maximum rates
- Programs for startups
- Accredited by BBB with A+ rating
Cons
- Good credit required
- Long turnaround time
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| Loan amount | $5,000 – $350,000 |
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| APR | 0% to 15% |
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| Min. Credit Score | 700 |
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| Loan term | Up to 7 years |
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| Requirements | 600 to 800 credit score, no required years in business or monthly cashflow, though $1,000 to $5,000 monthly is preferred |
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| Loan amount | $5,000 – $350,000 |
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| APR | 0% to 15% |
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| Min. Credit Score | 700 |
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How we picked these lenders
We picked these lenders based on cost, availability and the ability to fund most types of cannabis businesses. We also looked for lenders that made a point they could accommodate high-risk businesses and startups, either with special programs or loans specifically for cannabis businesses. We also considered customer reviews, reputation and Better Business Bureau (BBB) accreditation and ratings.
Since no one loan is best for every business, we made sure to include lenders that offered different types of funding to fit a variety of business needs.
How to qualify for a cannabis business loan
Business financing is different when it comes to the cannabis industry. Since many cannabis businesses don’t have financial business records, your eligibility often heavily depends on your personal financial history.
Here’s what you may need to qualify:
- Good personal credit. Generally, you’ll need a credit score of 670 or higher to qualify for a good deal on a cannabis business loan.
- Long credit history. The length of your credit history can also affect your application. Typically, you’ll need at least three years.
- No bankruptcies. You usually can’t have bankruptcies or other negative marks like tax liens or foreclosures on your credit report.
- Business bank account. While not always required, you often need to have a bank account for your cannabis business.
- Minimum time in business. Lenders typically require you to be up and running for at least six months to a year, with a few requiring at least two years.
- Legal status. Generally, all business owners need to be US citizens or permanent residents to qualify.
How to get a loan to open a dispensary
Securing a loan to open a dispensary can be complex, so you’ll want to understand the legal and regulatory laws surrounding cannabis-related businesses in your jurisdiction. Some steps are the same as getting a loan for a traditional business, but you may have extra leg work when seeking a loan for a cannabis-related business.
- Develop a business plan. Demonstrate to lenders that you have a solid business plan by outlining your business concept, financial projections, target market and marketing plan.
- Gather financial documents. To save time, compile financial documents such as personal and business tax returns, bank statements and any other financial statements that demonstrate your financial stability.
- Research and present your case to lenders. Research lenders that are open to working with cannabis-related businesses. Some lenders may explicitly say that they work with dispensaries and other related businesses. Approach potential lenders with your business plan and financial documents.
- Consider alternative financing options. If you experience difficulties securing a loan with a traditional lender, explore alternative financing options such as angel investors, private investors, peer-to-peer lenders or cannabis-specific lending companies.
Types of cannabis business loans
There are several types of loans that you can use to fund your cannabis business. Which one is right for you depends on what you need financing for.
- Equipment financing is a lease or loan specifically to buy equipment for cultivating, processing and other uses.
- Working capital loans cover overhead costs like payroll and inventory when your business doesn’t have enough regular revenue.
- Merchant cash advances give dispensaries and other consumer-facing businesses an advance on future sales, which you repay plus a fixed fee.
- Invoice factoring allows growers and other business-facing companies to sell unpaid invoices at a discount to factoring companies. These usually come with a fee based on how long your clients take to fill their invoices.
- Purchase order financing fronts you money to fill orders from customers. Like with factoring, you repay it plus a fee when your customers pay for the order.
- Commercial real estate loans offer financing to buy land, warehouses and other physical locations you need to operate your cannabis business.
Regulations around cannabis business loans
Cannabis is still federally illegal, so banks that offer loans to the cannabis industry 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 impossible for you to get a business loan from an FDIC-insured bank and hard to find funding from non-insured banks or lenders.
Additionally, cannabis businesses currently are ineligible for loans backed by the Small Business Administration, or SBA loans. That’s because the SBA doesn’t offer loans to businesses that engage in illegal activity. Unless the SBA makes an exception, these low-cost loans are off the table for the cannabis industry until cannabis is legalized at the federal level.
What about CBD business loans?
CBD businesses may fall into a legal gray area — but unlike cannabis, CBD use is legal in all 50 states. So getting funding for one is easier than for a cannabis business, especially in states where recreational cannabis has been legalized.
A cannabis lender could help, as there is overlap between the two types of businesses.
Cannabis legality by state
Legal status in your state is one factor when it comes to qualifying for a cannabis business loan. Check out our map to see legal status across the US.
| Alabama | Mixed | Yes | No |
| Alaska | Fully legal | Yes | Yes |
| Arizona | Fully legal | Yes | Yes |
| Arkansas | Mixed | CBD oil only | No |
| California | Fully legal | Yes | Yes |
| Colorado | Fully legal | Yes | Yes |
| Connecticut | Fully legal | Yes | Yes |
| Delaware | Fully legal | Yes | Yes |
| District of Columbia | Fully legal | Yes | Yes |
| Florida | Mixed | Yes | No |
| Georgia | Mixed | CBD oil only | No |
| Hawaii | Mixed | Yes | Yes |
| Idaho | Fully illegal | CBD oil only | No |
| Illinois | Fully legal | Yes | Yes |
| Indiana | Mixed | CBD oil only | No |
| Iowa | Mixed | CBD oil only | No |
| Kansas | Fully illegal | No | No |
| Kentucky | Mixed | Yes | No |
| Louisiana | Mixed | Yes | Yes |
| Maine | Fully legal | Yes | Yes |
| Maryland | Mixed | Yes | Yes |
| Massachusetts | Fully legal | Yes | Yes |
| Michigan | Fully legal | Yes | Yes |
| Minnesota | Fully legal | Yes | Yes |
| Mississippi | Mixed | Yes | Yes |
| Missouri | Fully legal | Yes | Yes |
| Montana | Fully legal | Yes | Yes |
| Nebraska | Mixed | CBD oil only | Yes (first offense only) |
| Nevada | Fully legal | Yes | Yes |
| New Hampshire | Mixed | Yes | Yes |
| New Jersey | Fully legal | Yes | Yes |
| New Mexico | Fully legal | Yes | Yes |
| New York | Fully legal | Yes | Yes |
| North Carolina | Mixed | CBD oil only | Yes |
| North Dakota | Mixed | Yes | Yes |
| Ohio | Mixed | Yes | Yes |
| Oklahoma | Mixed | Yes | No |
| Oregon | Fully legal | Yes | Yes |
| Pennsylvania | Mixed | Yes | No |
| Rhode Island | Fully legal | Yes | Yes |
| South Carolina | Fully illegal | CBD oil only | No |
| South Dakota | Mixed | Yes | No |
| Tennessee | Mixed | CBD oil only | No |
| Texas | Mixed | CBD oil only | No |
| Utah | Mixed | Yes | No |
| Vermont | Fully legal | Yes | Yes |
| Virginia | Fully legal | Yes | Yes |
| Washington | Fully legal | Yes | Yes |
| West Virginia | Mixed | Yes | No |
| Wisconsin | Mixed | CBD oil only | No |
| Wyoming | Fully illegal | CBD oil only | No |
Source: DISA Global Solutions
What are some alternatives to cannabis business loans?
If you plan on starting a cannabis business and don’t qualify with an online lender, there are other creative ways to seek out funding:
- Crowdfunding. The US Securities and Exchange Commission (SEC) allows anyone to invest up to $2,200 in small companies in exchange for a stake in the business. Companies can raise up to $1.07 million this way — and one way to do it all in one place is through crowdfunding.
- Business lines of credit. Alternative financing companies also offer lines of credit to help cannabis businesses cover ongoing expenses, though it’s often more expensive than a loan.
- Real estate loans. You can use these loans to buy or refinance the buildings or raw land you need to run your business.
- Angel investors. Similar to venture capitalists, angel investors help businesses get started and typically deal with smaller amounts of money.
- Personal loans. Got a solid credit history? You might have better luck getting approved for a personal loan. But make sure your lender allows you to put the funds toward a cannabis business.
- Home equity loans. Homeowners can also borrow against their home’s value with a home equity loan or line of credit. You’ll also need to make sure your use is legitimate, though.
- Private equity funding. Some private equity firms may be willing to offer short-term, high-interest loans or funding for a large stake in your company.
- Venture capitalists. In nearly all industries, you’ll find wealthy investors interested in helping small businesses grow, often in exchange for equity.
- Friend and family loans. Your friends and family can also invest in your business by personally lending you the funds and collecting on interest. Bring on a lawyer to help you write a legally binding contract to hold everyone accountable.
Cannabis business grants
Some states offer grants to help get a cannabis business started. Depending on your home state, you may qualify for one.
For example, California has the Cannabis Equity Grants Program. Its purpose is to aid local businesses in acquiring licensees and as a way to regulate cannabis in a way that “reduces barriers to entry into the legal, regulated market,” stated on CA.gov. This program offers assistance with regulatory compliance and securing the capital necessary to start the business.
Bottom line
If you have good credit, cannabis business loans can be an affordable financing option if you’d rather retain full ownership of your business. But since it’s such a high risk for lenders, you’ll likely pay higher rates and fees compared to the average rates for business loans.
If you’re sitll unsure about which type of business loan you need and want to find out more of your business loan options, check out our guide to businesses loans to learn more.
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Hello,
My state just legalized MMJ and I want to open a cultivation operation to strictly grow. Its big rewards but big up front costs to get in the game. Does Finder help cultivation operations as well?
Hi Jeff,
Thanks for reaching out. Just to clarify, finder.com is a comparison website and general information service, we do not provide funding or offer loan ourselves.
While a bank loan is not an option currently available for cannabis businesses, there are other financing options mentioned above that you can look into. One of which is crowdfunding.
Kind regards,
Liezl
How can I get in the business
Hey Stanley,
Thank you for reaching out to us.
You’re on the right page for your concern as it includes how to start a marijuana dispensary found further down the page.
In summary, these are the possible steps:
– Understand your state’s laws.
– Make sure you’re eligible.
– Research any tax laws.
– Find a compliant rental space.
– Create a business plan.
– Get a license.
– Get good product.
– Market your business.
I hope this helps.
Best,
Maria