The Cannabis industry has been called a modern-day gold mine, but if you are trying to get into the cannabis industry on any level, is a cannabis business loan really worth it? Read on to find out what you need to know about cannabis business loans and decide whether they are a worthwhile decision for your business.
Unique Challenges Of The Cannabis Industry
All small business owners face challenges in cash flow, but those in the cannabis industry face special challenges. Federal regulations mean that banks, credit card companies, and credit unions may not finance any business related to cannabis.
Despite the fact that recreational cannabis is legal in 11 states and medical cannabis is legal in 33 states, the vast majority of financing industries refuse to work with cannabis business owners. You are unlikely to get a traditional loan if you need money for a real estate payment, loans for equipment or real estate, or anything else related to the cannabis industry.
This means that many cannabis businesses operate primarily on cash. Cannabis business owners find themselves struggling to meet demand when it increases, limiting the growth of their business.
Advantages Of Cannabis Business Loans
- Grow when you need to. A cannabis business loan can give you the finances that you need to grow your business when demand merits it. Don’t hesitate to take your next big order. Make the deal with confidence with the knowledge that you can get the financing you need to meet the order.
- Grow when you want to. Use your cannabis business loan to grow your business on your terms, rather than waiting for periodic income to make the changes you need to make for the success of your business.
- Confidence to spend. Use the money that you earn to improve your business and pay your staff, rather than hoarding it for fear of something going wrong. The confidence that you can get a cannabis business loan will offer you the freedom to use your money more liberally.
- Avoid cash stockpiling. Stockpiling cash doesn’t just mean that you can’t reinvest into your business– it means that you need to keep it safe in the meantime. Letting your money sit in a bank savings account isn’t a great way to invest in your business.
Who Should Consider A Cannabis Business Loan?
Every aspect of the Cannabis industry can benefit from a cannabis business loan:
- Cultivators. Most farmers, of any produce, face a shortage of income at the beginning of the season and need a stockpile of cash to begin growing. A cannabis loan can help cannabis cultivators get started with the season.
- Distributors. To sell a large order, distributors must purchase the supplies, which may require a loan.
- Manufacturers. Getting a factory order for the first time can be very expensive, so you need a loan to meet the minimum order for your products
- Brands. The cannabis industry is competitive. Your brand needs to be able to advertise, create packaging, and hire the best minds to make your brand succeed.
- Distributors. Not every distributor will qualify for a cannabis business loan. Still, for those that do, the money can be extremely valuable for establishing a storefront, stocking, and hiring employees, among other small business startup expenses.
Where Can I Find A Reputable Cannabis Business Loan?
The best place to find a reputable cannabis business loan is an organization designed specifically for cannabis financing. Because of the special constraints on the cannabis industry, a special financial company is required.
Licensed lenders who support cannabis companies understand the unique challenges of this industry and are skilled at working with federal, state, and local regulations to ensure the success of your loan.