Cannabis Business Loan: Dispensary Financing and Marijuana Industry Investment

Running a cannabis business can be a very profitable endeavor. As more states start to legalize the sale of marijuana, the number of potential customers will continue to grow. This will cause the industry to continue to expand. In fact, according to some estimates, it could be worth around $70 billion by 2021. For this reason, many people might want to consider starting one of these cannabis businesses for themselves. However, this can bring a unique series of challenges.

Like all businesses, you will need to have a few key elements. First, you will have to have a real estate property that you can operate from. Then, you will have to make sure that you have enough funds to purchase cannabis products and advertise. This can often require a significant amount of financial resources. Thankfully, there is an easy way to finance these operations. Let’s look at some of the most important fundamentals of obtaining a cannabis business loan.

Why Should You Start A Cannabis Dispensary?

As we’ve seen, there are multiple difficulties that you might face when starting a cannabis dispensary. There are many challenges that you will need to overcome. For example, there is still some resistance to the dispensary from some members of the community. In addition, there will be multiple legal requirements that you will need to face. For example, cannabis is classed as a schedule 1 substance. This places some restrictions on the quantities that you can supply and the circumstances that you will be able to sell it in. Because of these factors, many people might not want to get involved in the cannabis business. However, they could be missing out on a lucrative opportunity. Let’s look at some of the upsides that this business will be able to provide.

As we mentioned earlier, the industry is going through massive growth. There are multiple reasons why this is occurring. First, there is more research being done on the benefits that marijuana use might be able to provide. This has prompted more doctors to prescribe cannabis drugs to their patients. It’s also caused more people to get interested in trying cannabis. This is reflected in a shift in the way that people view this drug. In the early 1960s and 1970s, public approval of cannabis was very low. In some cases, it was as low as 12 percent. However, as time has gone on, the drug has become more accepted. Currently, it’s believed that around 60 percent of the population supports the legalization of marijuana. This is most powerfully felt amongst the younger generation, with 77 percent of people between the ages of 18 and 34 supporting the idea. This suggests that in the future the support for legal marijuana will continue to grow. As cannabis becomes more easily available dispensaries will be able to attract new customers, further increasing their profits.

There is another persuasive reason why more states might be willing to legalize the sale of cannabis. The sale of the drug often attracts high taxes. This makes them a very profitable source of revenue for the states. Because of this, the states can afford to implement more projects.  Each time that a state legalizes marijuana, it provides dispensaries with another potential market that they will be able to sell to. This can help cause the industry to continue to expand. If you are able to start your dispensary now, you will be able to capitalize on the growth that the market is experiencing. To further evaluate why this makes such a good investment, let’s look at some of the future growth that the cannabis industry is expected to achieve.

Forecasting The Future Of The Marijuana Industry

Before you get involved in an industry, it’s important that you understand its future outlook. This will allow you to know whether the business will be likely to grow or decline. As we saw, the attitudes towards marijuana have significantly changed in recent years. This has had a big impact on future growth that can be expected from this industry. Currently, multiple studies have shown that the cannabis industry will be one of the fastest-growing in the country. Let’s look at some of the most important figures that you might need to understand.

Currently, the cannabis industry plays an important part in the American economy. As we mentioned, the taxes are an important part of the state’s funding, helping make sure that important projects will be able to be developed. In addition, the cannabis industry remains a key employer. It’s believed that over 165,000 people are employed by the cannabis industry. This makes it one of the biggest employers in the country, overtaking the number of people who are employed in the telemarketing industry. While these figures are impressive, they don’t take into account the businesses that will benefit from a boost in the marijuana industry. For example, this will have a big impact on doctors and pharmacists. It will also ensure that more people are needed to grow and produce products. There will also need to be more people to transport the items. Because of this prosperity, people will have more money to spend on cannabis products. This will ensure that the industry can continue to thrive.

As we’ve seen, the cannabis industry is currently very strong. However, in the future, it is expected to continue displaying strong growth. For example, it’s believed that the industry will continue to grow, by around 17 percent per year. This means that, by 2025, it will be valued at $24 billion. Because of this, the number of jobs will continue to grow. Evidence of this could be seen when Nevada legalized marijuana. The demand was so strong that distributors started to run out of cannabis. As the supply started to dwindle, the government had to implement a state of emergency. Often, this level is reserved for serious crises, like natural disasters. The state of emergency allowed dispensaries to bring in more drugs. It’s likely that, as more people get used to using the drug, the demand will continue to grow.

There are plenty of opportunities that are yet to be fully explored. Currently, much of the research and discussion is centered on the medical benefits that marijuana can provide. However, this has been neglecting the health and wellness market. As more dispensaries start to tap into this market and explore how marijuana can benefit mental health, it will cause a further increase in demand for these products. This could help further expand the industry and fuel growth. This is great news for people considering starting a dispensary, allowing you to build a profitable business.

The Difficulties Of Obtaining Cannabis Funding

As we’ve seen, the cannabis industry can make a great investment and a potentially lucrative business opportunity. However, in order for you to take advantage of this opportunity, you will need to obtain a dispensary loan. Based on the strong industry growth that we discussed, you might believe that this will be a fairly easy task. But there are multiple roadblocks that can make getting access to a cannabis business loan challenging.

This area requires you to fulfill a lot of legal requirements. Despite the growing pressure on governments, recreational marijuana use is only legal in 11 states. However, it isn’t legal on a federal level. This can make it difficult for banks to provide funding to these businesses, as they are bound by federal law. Even smaller banks won’t be allowed to provide marijuana business funding. This can make a very difficult situation for cannabis dispensary owners. Without the funding that you need, you will be unable to run your cannabis business effectively. This can also affect people who are associated with those in the cannabis industry. For example, these rules can also have an impact on landlords and cleaning companies.

These factors create a unique situation. While the industry is able to achieve strong, double-digit growth, business owners are struggling to get the funding that they require. This can be a very frustrating experience. It also remains a big roadblock, preventing many people from joining the industry. Because they struggle support from financial institutions, those working in the cannabis industry are forced to find alternative funding for their operations.

Alternative Means Of Cannabis Funding

As we’ve seen, there are multiple obstacles that can make it harder for you to obtain marijuana business funding. Thankfully, there are multiple funding techniques that you might want to explore. Often each will have distinct pros and cons. This makes it important for you to consider your unique situation when comparing each option so that you are able to find the one that works best for you. In addition, you might want to compare multiple providers, so that you can find the ones that will be able to provide the best possible terms. To make this easier, let’s look at some of the best ways to fund a cannabis dispensary.

Equity Financing

In some cases, you might want to sell equity in the business in exchange for capital, this is known as equity investing. Because of the strong growth that the industry is experiencing, it’s likely that you will be able to attract multiple investors. When doing this, there are two avenues that you might want to explore. These are either venture capital or angel investors.

When you use venture capital, you are going to be working with groups that have a deep understanding of the cannabis industry. This can allow them to provide some useful insights and help them point you in the right direction. Alternatively, you might want to explore angel investors. These are individuals, rather than a bigger group. This can make it easier to develop a strong relationship with them.

This can be a great way to earn money quickly, financing your distillery. However, it can also come with some pressure. The investors will be looking for your company to provide a good return on their investment. In addition, you will need to consider government legislation, which aims to ensure that both parties are protected.

Crowdfunding

Another funding method that you might want to explore is crowdfunding. Using the internet, you will be able to get people to give money to a project, like the establishment of your distillery. In exchange for their donation, it’s customary to offer a reward to those who’ve supported you. This can be something like a keychain, hat, or some other piece of merchandise. Often, the type of thing that they will receive will vary, depending on the amount that they donate. This will allow you to encourage people to donate more generously.

However, there are some downsides that you will need to consider. First, it can be harder to raise a lot of money through these projects. For this reason, they tend to be used for smaller projects, like developing a new product. In addition, depending on the website you use to host the campaign, you will need to raise all the money you’re requesting. If you fail to meet the fundraising goals in the required time, you might not get anything. Finally, there are some regulations about the amount that investors are allowed to provide. This is even more common if you intend to give away equity in your business as one of the rewards.

Equipment Leasing

If you aren’t interested in opening a distillery, and instead want to focus on growing marijuana, you might want to consider using equipment leasing. This will allow you to get the capital required to purchase the equipment that you will use to run your operation. The terms of the agreement will often vary, depending on the type of equipment that your organization will require. If you don’t have the funds required to purchase the tools, you can consider using an equipment leasing option. In this option, a company will rent you the equipment.

Commercial Real Estate Loan

In order to get your operation off the ground, you will need to make sure that you have access to the land. A commercial real-estate option might help you do this. There are multiple types of options that you might want to consider. This will make it easier for you to find the one that will work best for you. However, this can be a longer loan period, in some cases lasting for around five years. For this reason, you might want to shop around to make sure that you are getting the best possible deal.

 Merchant Cash Advance

You might also want to consider using a merchant cash advance. In this model, you will be able to receive the required funding, like in a loan. However, unlike a loan, the business will pay based on future turnover. You will continue to pay a percentage of the takings until the loan has been paid back. You might also need to pay a fee, which will be charged by the lender.

There are a few factors to consider when using this approach. First, you will be able to get faster access to the required funds. Because the lender can work directly with your EFTPOS provider, they will be able to quickly get an accurate understanding of the cash flow of the business. Because of this, they can let you know whether or not you’ve been approved or denied within a few days. This might also be a great option for businesses that have high cash turnover, as you will be able to repay the loan quickly. However, it can be more expensive than a traditional bank loan.

Line Of Credit

Finally, you might want to apply for a line of credit. This will act in a similar way to a credit card. You will be able to go into debt with the lender, up to a certain limit. While some of the other options will be a better option for cannabis business loans, this can play an important role in your business. Having a line of credit will help you smooth out the ups and downs of a business. For example, if you are waiting for late payment you will be able to briefly use the line of credit while you wait for the funds to come in.

Alternative Business Funding

While these alternative business funding methods are interesting ideas, they might struggle to provide the amount of money required to fund your dispensary. For this reason, many people turn to alternative business funding. This can bring other benefits. For example, there will be less focus on your credit and more on your performance. In addition, you might not require high levels of collateral, which you will need for most bank loans. Also, there tends to be a shorter payback period. This will reduce the financial burden that your business will be placed under. For these reasons, alternative financing is becoming quite popular, especially in highly regulated industries like marijuana businesses. Let’s look at what alternative funding is, and the type of agreement that you might be able to reach with your provider.

What Is An Alternative Business Funding Lender?

As we discussed, this can be very difficult to obtain from a financial institution like a bank, due to federal laws. For this reason, more people are turning to alternative lenders, like the South Florida Funding Group. This term can be used to describe any form of lender that isn’t a bank. This will make it easier for you to obtain funding, without having to face the restrictions placed on the banking system. Often, these alternative lenders will be groups of individuals or organizations who want to invest in the growth of the cannabis industry. For this reason, they will be able to provide a significant amount of capital, making it easier to expand your business. To further understand how this approach works, let’s look at the marijuana business loan offered by the South Florida Funding Group.

How Alternative Business Funding Works

Let’s start by looking at some of the benefits that this method of marijuana business funding can provide. You will be able to get access to a substantial amount of money. This can be between $100,000 and $5 million. This ensures that you will have everything you need to start a successful business. In addition, you will be able to have your application processed and funded very quickly. In most cases, you can have the case assessed in 48 hours. Once approved, you will be able to get the money by the end of the week. If you secure the loan, you will be able to repay it over one to four years, depending on the nature of the agreement.

There are also a few funding requirements that you might want to take note of. First, this is only available to established businesses. You will need to have been running the business for at least one year. In addition, you will need to be able to present over $10,000 in monthly cashflow. This will give the lenders confidence that you will be able to afford the loan repayments. In addition, you will need to submit a business plan and provide financial statements about the organization. While the owner’s experience will be considered, you don’t need to provide a FICO score.

The cannabis industry is going through a period of record growth. In the future, it’s predicted to outperform established areas like manufacturing. Because of this, many businesses want to get involved, profiting from the rising popularity of marijuana. However, getting dispensary funding can be very difficult, because of federal government regulations being placed onto the banks. For this reason, many people are turning to different ways of getting money for their cannabis businesses. As we discussed, there are several options for you to explore. But one of the most effective might be getting alternative funding, from a provider like South Florida Funding Group. This will make it easier for you to get a business loan for a large amount of money. So, make sure to get in contact today to further discuss your options and find the best dispensary loans for your organization. Click here to Qualify Now!