Cannabis Loans

Loans are available for Cannabis Hemp and Cannabis Marijuana companies, but these resources are limited and more expensive than other industries.

The cannabis industry is maturing quickly, and although the financial sector in the industry has grown, it’s not growing as rapidly as retail, production, and distribution. Requests for cannabis capital continue to grow at a rapid pace, while funds have moved slowly to accommodate growth. The end result is that in 2021, the cost of capital in the debt markets has risen and the credit criteria has tightened. Federal restrictions on banks and perceived risk among private lenders, has contributed to the scarcity of sources for cannabis loans. Pending federal legalization, it’s unlikely that a good number of banks will rush into the market to serve cannabis businesses. The industry is still considered to be a high-risk industry despite the profit margins that can be achieved. That said, several cannabis loan types are available in the industry.

Cannabis Real Estate Loans

Cannabis real estate loans that are almost always accompanied with a construction component are among the most commonly requested loan types. The interest on cannabis real estate/construction loans ranges between high single digit rates to rates in the high teens. The typical maximum LTV on real estate loans is 65%, and they require 4-6 weeks to close. In most cases, they will require personal guarantees. Rate and term will depend on the financial disposition of the owners and the company. A publicly traded company with $80 million in assets on their balance sheet with $5 million per year in profitability will be at the low end of the interest and points/fees scale. Startups can qualify for cannabis real estate loans; however, they will be paying rates and fees at the upper end of the scale. Startups can qualify for more competitive rates if the sponsors can cross collateralize another profitable, established business.

Cannabis Equipment Loans and Leasebacks

Cannabis equipment loans are available for extraction, lab testing, packaging, and cultivation operations. They typically come in the form of a fully amortized 24-month lease with a $1 or low percentage fair market buyout at the end of the term. If a borrower is looking to get a loan against their existing cannabis equipment, this can be done using a leaseback credit facility. New equipment can typically be financed in 2-4 weeks. Leasebacks almost always require an equipment appraisal, so they typically require 3-5 weeks.


As MSO’s begin to extend their brand reach, the land race to establishing a national brand becomes a focus. Although cannabis capital is more expensive than, the cost of losing ground in a race to be the next “Coca-Cola” of cannabis may be much higher in the long run. HEF Finance has worked with many publicly traded and privately held cannabis companies to obtain leverage to accelerate their brand footprint, and profits, through the acquisition of retail dispensaries, manufacturing operations, and cultivation facilities. Companies that have shown their ability to establish solid brand success and profitability may be in a position to use debt in their capital stack to make a significant difference in their ability to sustain or improve their growth trajectory.

Revenue Based Cannabis Loans

Revenue based loans such as lines of credit and MCA’s are available in the cannabis industry. As unsecured credit facilities, their cost is substantially higher than real estate loans or equipment loans. However, these high cost loans can sometimes make sense. A quick cash injection to allow a company to serve the needs of a highly profitable contract is one such example. These loans are “Band-Aids” – intended to be taken only in an a more extreme scenario and are short term. They are quick to underwrite and can be closed in days rather than weeks.

Purchase Order Financing

Purchase order financing, another unsecured cannabis loan type, is another way to help a cannabis company obtain liquidity. Based more on the financial disposition of the buyer, PO financing can help a company obtain liquidity to serve a contract that requires significant resources of the seller to service the contract. If the buyer can show they have the financial wherewithal to pay for the services rendered, and the contract clearly protects the seller/borrower, then these loans can be underwritten and funded. This credit facility requires the cooperation of both the buyer and seller in the underwriting process.

Other Cannabis Loans and Cross Collateralization

At HEF Finance, the goal is to find the best path to liquidity for our clients. By exploring the balance sheet, the assets of the sponsors, and other existing businesses that may not be cannabis businesses but are owned by the sponsors, we can find more possibilities. Crossing (cross collateralizing) another profitable asset, not only enhances the probability of closing a loan, but has a positive effect on rate and term. Usually after a 15 minute “discovery call” with an HEF Finance Consultant, an optimal path, based on all of the assets at a borrower’s disposal, can be discovered.

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Can I get a loan for my Cannabis Startup business

At HEF Finance, we get this question usually a few times a week. And, we always say that we have executed many loans for startups and pre-revenue companies for public and private companies in both the U.S. and Canada. That said, like all cannabis loans, the business needs certain ingredients to execute a loan successfully.

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