First Down Funding business loans
Finder rating 4.6 / 5 ★★★★★
|Loan amount||$5,000 – $300,000|
|Min. Credit Score||400|
Federal regulations make it difficult to find a loan from most lenders if you’re in the cannabis industry — at least for now. It’s still possible to find funding, though you’ll generally need good credit, which is typically a credit score of 670 or higher.
Finder rating 4.6 / 5 ★★★★★
|Loan amount||$5,000 – $300,000|
|Min. Credit Score||400|
Finder rating 3.85 / 5 ★★★★★
|Loan amount||$25,000 – $150,000|
|APR||5.9% to 19.99%|
|Min. Credit Score||680|
Finder rating 4.8 / 5 ★★★★★
|Loan amount||$10,000 – $5,000,000|
|APR||Starting from 5%|
|Min. Credit Score||550|
Finder rating 4.2 / 5 ★★★★★
|Loan amount||$1,000 – $250,000|
|APR||6.98% to 30%|
|Min. Credit Score||700|
We picked these lenders based on cost, availability and the ability to fund most types of cannabis businesses. 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.
There are several different 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.
No, cannabis businesses currently are ineligible for loans backed by the Small Business Administration, or SBA loans. This includes all types of federally funded coronavirus assistance. 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 on the federal level.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Business financing is a little 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 generally need to qualify:
You’ll likely have to apply with alternative, nonbank lenders. Banks that have a national charter or FDIC insurance generally won’t work with cannabis because it’s illegal on a federal level. They risk losing their licenses if they take you on as a client.
Probably — most lenders have ways to verify the information on your application is correct and that you’re in an eligible industry.
Some use anti-money laundering or fraud-detection software to weed out cannabis companies. And others look out for suspicious signs in your bank account, like regular deposits just under $10,000. You’re better off applying with a cannabis-friendly lender if you’re trying to get a business loan.
Most banks don’t offer cannabis financing because it’s highly risky. 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 transports 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 even from non-insured banks or lenders.
If passed, the Secure and Fair Enforcement Banking Act of 2021, or SAFE Banking Act would allow banks to offer loans and other banking services to the cannabis industry. It would prevent the federal government from penalizing banks that offer financial services to the cannabis industry. And it would also prevent banks from closing accounts based on the risk of lending to cannabis businesses alone.
The SAFE Act passed Congress on April 19, 2021 and is awaiting Senate approval.
Like other business loans, cannabis business loans are restricted to business use. You can’t use a cannabis business loan to buy a car that is primarily for personal use, for example.
You also generally need to use your loan for the use you mentioned in the application. If you want to buy property or a storefront, you can’t use a working capital loan — you’ll have to apply for a real estate loan.
How much your loan costs depends on the type of loan you apply for. Your cannabis business loan might come with the following types of costs:
Cannabis business loans can be riskier than options available to other industries. Like other businesses in the cannabis industry, cannabis lenders don’t face as many regulations, so it’s possible to run into scams.
Do a little detective work before applying with a lender:
While cannabis is illegal federally, it’s legal in many states for medical or recreational use. Laws and regulations frequently change, so the best way to make sure your business is acting legally is to check with the state itself.Typically you can find rules for cannabis and CBD businesses, like licensing requirements, through the agency that regulates your business. Some states might also have a separate agency that regulates cannabis consumption.
New York State legalized recreational cannabis on March 31, 2021. Consumers can now possess up to three ounces of cannabis and up to 24 ounces of wax, oil and other THC concentrates for recreational purposes.
However, other parts of the law will be rolling out over the next few months — including the creation of a new state agency to regulate cannabis use. While it’s safe to start planning a New York cannabis business, you’ll have to wait for financing and state guidance to become available.
While the California Bureau of Cannabis Control (BCC) and the Department of Business Oversight (DBO) are responsible for regulating the industry, it doesn’t have any specific rules for cannabis business loans.
But a lot of cannabis-friendly lenders are based in the Golden State, and it might be easier to find a loan here than in other states. California is one of the few states that requires lenders to be licensed. If you can’t find a lender’s licence on its website, check its status by filling out a quick form on the California DBO website.
Opening a dispensary is not as easy as growing some plants and setting up shop. However, if you’re willing to put in the extra work and deal with some red tape, there is money to be made.
Since cannabis business loans are generally dependent on the owner’s personal finances, it might be easier to find a startup loan than businesses in other industries. But you still might not get the best rates without a track record — or if your credit is less than perfect.
You might also want to consider other options, like equity investments or a personal loan. If you take out a personal loan, make sure the lender doesn’t have restrictions on using the funds for federally illegal activity.
If your cannabis business doesn’t qualify with an online lender, there are other creative ways to seek out funding:
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 than other industries.
For funding that’s more affordable with fewer requirements, check out our guide to investor crowdfunding for cannabis businesses.
Get the answers to common questions about financing a cannabis business.
Can I get a medical marijuana business loan if recreational cannabis isn’t legal in my state?
You can, though you might have a more difficult time finding a traditional business loan locally. You might want to look to lenders working out of states where recreational marijuana is legal or crowdfunding platforms to connect you with investors.
If you’re just starting a medical marijuana business, you’ll also need to confirm with your local authorities that everything is legal before you get started.
Are these same options available to CBD businesses?
In general, yes. Most lenders that are willing to work with businesses in the cannabis industry are also open to CBD businesses. You can learn more about your financing options with our guide to CBD business loans.
What is a Schedule I drug?
A Schedule I drug is a Drug Enforcement Administration (DEA) classification for drugs the federal government considers to have no accepted medical use and a high potential for abuse. Despite the fact that many states have laws that allow medical and recreational use of cannabis, it’s still considered a Schedule I substance, along with heroin and ecstasy.
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