Due to conflicting federal and state marijuana laws, getting funding to operate a legal marijuana dispensary can be challenging.
Many states have adopted laws legalizing recreational and medical marijuana, but some have not. Meanwhile, the federal government considers any type of use or possession a crime. This type of legal murkiness forces many dispensaries to operate cash only businesses because they cannot open bank accounts. This forces medical and recreational marijuana businesses to purchase 24/7 high-tech video security systems, as well as special doors and windows with lock, to ensure their safety.
Buying all of these extra security measures is expensive and just like opening bank accounts, it is just as difficult to get financing from a traditional lender. The best way to get the money you need is to apply for a dispensary loan from an alternative lender. Though the pool of potential lenders is small, it is not impossible to secure the funds you need.
How to Gets Funds to Pay for Marijuana Dispensary Related Expenses
Though banks likely will not fund your dispensary, there are plenty of other types of financing that you can seek from alternative lenders, such as:
- Private Loans: Private non-bank lenders like to finance growers and manufacturers of cannabis products, especially those that have good revenues.
- Equipment Leasing: Growers in need of agriculture equipment to help maintain their businesses can get the machinery they need by leasing necessary items from an equipment leasing business.
- Revenue-Based Loans: Also known as a merchant cash advance, this type of short-term cannabis financing is a good way to obtain fast short-term funding to buy marijuana dispensary inventory. To get approved for this type of financing, you need a healthy stream of credit card transactions. Instead of credit scores and collateral, this type of financing depends on business’ future credit cards sales. The amount a business pays back each week or month depends on sales volumes. If your business is having a rough week in sales, the repayment is smaller. This type of financing gives you the flexibility to launch a long-term marketing strategy, add new employees, or buy new computers or machinery without having to forfeit funds set aside for day-to-day business operations.
- Get Investors: There are many people who interested in getting a piece of the recreational and medical marijuana industry. Gaining investors through crowdfunding or other options allows you to get the funding you need without having to pay it back. However, you are agreeing to give an investor a share of your business.
The Last Word on the Matter
Running a marijuana is a lucrative business. However, operating one comes with a lot of other expenses and risks that you do not find with other businesses. As the general population continues to embrace the industry, traditional lenders will have to catch up and also be more welcoming when it comes to working with them. Until this changes, dispensaries will have to look elsewhere for financing.
Where to Apply When It Is Time
When it is time for you to apply for a marijuana dispensary loan, then consider applying to First American Merchant (FAM). Though major banks do not want to work with any marijuana-related businesses, First American Merchant does not shy away from these endeavors. FAM works with other “high risk” businesses, like marijuana dispensaries. The type of funding FAM offers versatile, and it can be personalized to offset the unique cash flow issues of marijuana dispensary businesses.
It offers a simple online loan application. Many applicants get approved in just a few days. What is stopping you? Apply now.