What alternative financing options are available to cannabis businesses when traditional bank loans aren’t accessible?

Answered By:
AlphaRoot Team
779 3 months ago

Banks are wary of serving cannabis companies because the plant is federally illegal; as a result, most cannabis firms still operate largely with cash and struggle to access basic banking. Entrepreneurs should explore:
Cannabis‑friendly credit unions and state‑chartered banks that work with licensed operators (these often have strict compliance requirements).
Private investors such as venture capital or angel investors willing to take industry risk.
Sale‑leaseback agreements, in which a property is sold to an investor who then leases it back to the cannabis business.
Equipment financing or leasing to fund lights, extraction equipment and vehicles.
Revenue‑based financing or royalty agreements, in which repayment is tied to a percentage of sales.
Crowdfunding and social‑equity funds, where permitted by local law, to raise capital from supporters.

Regardless of the source, it’s important to provide transparent financial records and a strong compliance program to reassure lenders and investors.

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