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Don’t Let A Lack of Capital Send Your Cannabis Business Up in Smoke

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Author: Al Razavi

Cannabis Business Financing

As cannabis becomes legal for medicinal and recreational use in more countries, states, and cities, there is a growing demand for businesses that can satisfy consumers. Unfortunately, getting funding to join the cannabis industry can be a challenge, especially if you’re operating in a place where local laws contradict federal regulations.

The problem is that banks and other traditional financial institutions don’t want to deal with the potential legal fallout from lending money to a company in an industry that isn’t seen as legitimate by federal regulators.

That doesn’t mean cannabis business owners are completely out of options or that finding funding is impossible. Instead, you’ll need to look for lenders, institutions, and funding platforms that recognize the value of financing this growing industry:

  • Your own network may be an option as friends and family may be willing to help get your business off the ground by giving you a loan. Make sure to treat them as loans, however, and not gifts. Set up payment terms all parties agree to and stick to them.
  • Crowdfunding platforms are excellent places to start asking for funds to grow your cannabis business. Try traditional platforms like Kickstarter or Indiegogo to appeal to cannabis users and activists. In addition, several crowdfunding platforms are cannabis-specific, such as Fundanna and CannaFundr.
  • As the name suggests, high-risk lenders loan money to companies considered high risk. They don’t adhere to the same strict regulations as traditional financial institutions, which gives them more flexibility when it comes to deciding which businesses to loan money to. However, their loans can come with high-interest rates and short payment terms.
  • Some companies are specifically catering to cannabis businesses by offering merchant capital advances instead of loans. With a merchant cash advance, you’ll get a lump sum payment that you pay back as a portion of your daily or weekly sales, along with an additional fee. However, they usually come with a high APR, so you may want to consider other options before going down this road.
  • Some companies offer equipment loans that can help you finance the equipment you need to run your cannabis business. This can ease some of the financial burdens of starting and growing a business in this field.

As you can see, getting funding for your cannabis business isn’t always easy or cheap. There is one more option, though, which is to seek help from a trusted partner like TAP Financial Partners.

TAP helps companies in the cannabis industry by providing capital, helping raise money, and offering general advisory and investment banking services. If you have questions about how to fund your cannabis business, let’s talk. Contact us to learn more about our services and gain valuable insights that can help you build and grow your cannabis business.


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