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Best cannabis business loans of 2024

Find lenders willing to work with business owners in this high-risk industry.

If you’re involved in the cannabis industry, you may find it challenging to find a lender willing to work with you. Most banks don’t offer cannabis financing because there’s no federal legal protection for financial institutions that work with cannabis-related businesses.

However, that’s what the SAFE Banking Act aims to change. As of September 2023, the Senate Banking Committee approved a bill that would make it easier for banks to serve state-legal cannabis businesses, such as allowing them to open bank accounts and get business loans.

In the meantime, it’s still possible to find funding for a cannabis business, despite federal roadblocks, though you’ll generally need good credit. Count on needing a credit score above 670, though some lenders on our list accept scores lower than that.

In the meantime, it’s still possible to find funding for a cannabis business, despite federal roadblocks. To help you, we’ve narrowed down some top lenders that work with cannabis businesses.

Best cannabis business lenders

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Best for higher loan amounts: Loanspark

Loanspark

4.6
★★★★★

Finder score

Loan amount$10,000 – $20,000,000
APRStarting at 1%
Min. Credit Score600

Best loans marketplace: GoKapital

GoKapital business loans

Loan amount$50,000 – $5,000,000
APR6% to 18%
Min. Credit Score500

Best for loan selection: FundCanna

FundCanna

APRNot listed

Best for bad credit: United Capital Source

United Capital Source business term loans

4.8
★★★★★

Finder score

Read review
Loan amount$1,000 – $10,000,000
APRNot stated
Min. Credit Score550

Best for fast funding: Canna Business Resources

Canna Business Resources

Loan amount$50,000 – $15,000,000

Best for real estate loans: Diamond Business Loans

Diamond Business Loans

3.8
★★★★★

Finder score

Loan amount$25,000 – $150,000
APR5.9% to 19.99%
Min. Credit Score680

Best for customer service: Finance Factory

Finance Factory business loans

4.1
★★★★★

Finder score

Loan amount$5,000 – $350,000
APR0% to 15%
Min. Credit Score700

How we picked these lenders

We picked these lenders based on cost, availability and the ability to fund most types of cannabis businesses. We also looked for lenders that made a point they could accommodate high-risk businesses and startups, either with special programs or loans specifically for cannabis businesses. We also considered customer reviews, reputation and Better Business Bureau (BBB) accreditation and ratings.

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.

How to qualify for a cannabis business loan

Business financing is 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 may need to qualify:

  • Good personal credit. Generally, you’ll need a credit score of 670 or higher to qualify for a good deal on a cannabis business loan.
  • Long credit history. The length of your credit history can also affect your application. Typically, you’ll need at least three years.
  • No bankruptcies. You usually can’t have bankruptcies or other negative marks like tax liens or foreclosures on your credit report.
  • Business bank account. While not always required, you often need to have a bank account for your cannabis business.
  • Minimum time in business. Lenders typically require you to be up and running for at least six months to a year, with a few requiring at least two years.
  • Legal status. Generally, all business owners need to be US citizens or permanent residents to qualify.

How to get a loan to open a dispensary

Securing a loan to open a dispensary can be complex, so you’ll want to understand the legal and regulatory laws surrounding cannabis-related businesses in your jurisdiction. Some steps are the same as getting a loan for a traditional business, but you may have extra leg work when seeking a loan for a cannabis-related business.

  1. Develop a business plan. Demonstrate to lenders that you have a solid business plan by outlining your business concept, financial projections, target market and marketing plan.
  2. Gather financial documents. To save time, compile financial documents such as personal and business tax returns, bank statements and any other financial statements that demonstrate your financial stability.
  3. Research and present your case to lenders. Research lenders that are open to working with cannabis-related businesses. Some lenders may explicitly say that they work with dispensaries and other related businesses. Approach potential lenders with your business plan and financial documents.
  4. Consider alternative financing options. If you experience difficulties securing a loan with a traditional lender, explore alternative financing options such as angel investors, private investors, peer-to-peer lenders or cannabis-specific lending companies.

Types of cannabis business loans

There are several 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.

  • Equipment financing is a lease or loan specifically to buy equipment for cultivating, processing and other uses.
  • Working capital loans cover overhead costs like payroll and inventory when your business doesn’t have enough regular revenue.
  • Merchant cash advances give dispensaries and other consumer-facing businesses an advance on future sales, which you repay plus a fixed fee.
  • Invoice factoring allows growers and other business-facing companies to sell unpaid invoices at a discount to factoring companies. These usually come with a fee based on how long your clients take to fill their invoices.
  • Purchase order financing fronts you money to fill orders from customers. Like with factoring, you repay it plus a fee when your customers pay for the order.
  • Commercial real estate loans offer financing to buy land, warehouses and other physical locations you need to operate your cannabis business.

Regulations around cannabis business loans

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 transporting 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 from non-insured banks or lenders.

Additionally, cannabis businesses currently are ineligible for loans backed by the Small Business Administration, or SBA loans. 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 at the federal level.

What about CBD business loans?

CBD businesses may fall into a legal gray area — but unlike cannabis, CBD use is legal in all 50 states. So getting funding for one is easier than for a cannabis business, especially in states where recreational cannabis has been legalized.

A cannabis lender could help, as there is overlap between the two types of businesses.

Cannabis legality by state

Legal status in your state is one factor when it comes to qualifying for a cannabis business loan. Check out our map to see legal status across the US.

StateLegal statusMedicinalDecrimininalized
AlabamaMixedYesNo
AlaskaFully legalYesYes
ArizonaFully legalYesYes
ArkansasMixedCBD oil onlyNo
CaliforniaFully legalYesYes
ColoradoFully legalYesYes
ConnecticutFully legalYesYes
DelawareFully legalYesYes
District of ColumbiaFully legalYesYes
FloridaMixedYesNo
GeorgiaMixedCBD oil onlyNo
HawaiiMixedYesYes
IdahoFully illegalCBD oil onlyNo
IllinoisFully legalYesYes
IndianaMixedCBD oil onlyNo
IowaMixedCBD oil onlyNo
KansasFully illegalNoNo
KentuckyMixedYesNo
LouisianaMixedYesYes
MaineFully legalYesYes
MarylandMixedYesYes
MassachusettsFully legalYesYes
MichiganFully legalYesYes
MinnesotaFully legalYesYes
MississippiMixedYesYes
MissouriFully legalYesYes
MontanaFully legalYesYes
NebraskaMixedCBD oil onlyYes (first offense only)
NevadaFully legalYesYes
New HampshireMixedYesYes
New JerseyFully legalYesYes
New MexicoFully legalYesYes
New YorkFully legalYesYes
North CarolinaMixedCBD oil onlyYes
North DakotaMixedYesYes
OhioMixedYesYes
OklahomaMixedYesNo
OregonFully legalYesYes
PennsylvaniaMixedYesNo
Rhode IslandFully legalYesYes
South CarolinaFully illegalCBD oil onlyNo
South DakotaMixedYesNo
TennesseeMixedCBD oil onlyNo
TexasMixedCBD oil onlyNo
UtahMixedYesNo
VermontFully legalYesYes
VirginiaFully legalYesYes
WashingtonFully legalYesYes
West VirginiaMixedYesNo
WisconsinMixedCBD oil onlyNo
WyomingFully illegalCBD oil onlyNo

Source: DISA Global Solutions

What are some alternatives to cannabis business loans?

If you plan on starting a cannabis business and don’t qualify with an online lender, there are other creative ways to seek out funding:

  • Crowdfunding. The US Securities and Exchange Commission (SEC) allows anyone to invest up to $2,200 in small companies in exchange for a stake in the business. Companies can raise up to $1.07 million this way — and one way to do it all in one place is through crowdfunding.
  • Business lines of credit. Alternative financing companies also offer lines of credit to help cannabis businesses cover ongoing expenses, though it’s often more expensive than a loan.
  • Real estate loans. You can use these loans to buy or refinance the buildings or raw land you need to run your business.
  • Angel investors. Similar to venture capitalists, angel investors help businesses get started and typically deal with smaller amounts of money.
  • Personal loans. Got a solid credit history? You might have better luck getting approved for a personal loan. But make sure your lender allows you to put the funds toward a cannabis business.
  • Home equity loans. Homeowners can also borrow against their home’s value with a home equity loan or line of credit. You’ll also need to make sure your use is legitimate, though.
  • Private equity funding. Some private equity firms may be willing to offer short-term, high-interest loans or funding for a large stake in your company.
  • Venture capitalists. In nearly all industries, you’ll find wealthy investors interested in helping small businesses grow, often in exchange for equity.
  • Friend and family loans. Your friends and family can also invest in your business by personally lending you the funds and collecting on interest. Bring on a lawyer to help you write a legally binding contract to hold everyone accountable.

Cannabis business grants

Some states offer grants to help get a cannabis business started. Depending on your home state, you may qualify for one.

For example, California has the Cannabis Equity Grants Program. Its purpose is to aid local businesses in acquiring licensees and as a way to regulate cannabis in a way that “reduces barriers to entry into the legal, regulated market,” stated on CA.gov. This program offers assistance with regulatory compliance and securing the capital necessary to start the business.

Bottom line

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 compared to the average rates for business loans.

If you’re sitll unsure about which type of business loan you need and want to find out more of your business loan options, check out our guide to businesses loans to learn more.

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To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings and reviewed by Anna Serio, a member of Finder's Editorial Review Board.
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Bethany Hickey is the banking editor and personal finance expert at Finder, specializing in banking, lending, insurance, and crypto. Bethany’s expertise in personal finance has garnered recognition from esteemed media outlets, such as Nasdaq, MSN, Yahoo Finance, GOBankingRates, SuperMoney, AOL and Newsweek. Her articles offer practical financial strategies to Americans, empowering them to make decisions that meet their financial goals. Her past work includes articles on generational spending and saving habits, lending, budgeting and managing debt. Before joining Finder, she was a content manager where she wrote hundreds of articles and news pieces on auto financing and credit repair for CarsDirect, Auto Credit Express and The Car Connection, among others. Bethany holds a BA in English from the University of Michigan-Flint, and was poetry editor for the university’s Qua Literary and Fine Arts Magazine. See full bio

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12 Responses

    Default Gravatar
    StanleySeptember 20, 2017

    How can I get in the business

      AvatarFinder
      MariaSeptember 20, 2017Finder

      Hey Stanley,

      Thank you for reaching out to us.

      You’re on the right page for your concern as it includes how to start a marijuana dispensary found further down the page.

      In summary, these are the possible steps:
      – Understand your state’s laws.
      – Make sure you’re eligible.
      – Research any tax laws.
      – Find a compliant rental space.
      – Create a business plan.
      – Get a license.
      – Get good product.
      – Market your business.

      I hope this helps.

      Best,
      Maria

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