# Cannabis business loans

Source: https://businessloanbroker.ai/industries/cannabis/
Site: BusinessLoanBroker.ai (powered by Levr)

> Cannabis business loans: why banks and the SBA decline plant touching businesses, who actually lends, typical pricing, documents, and hemp options.

Cannabis business loans are harder to get than loans in any other legal industry, because cannabis is still illegal under US federal law at the time of writing. Banks and SBA lenders will not lend to a business that grows, processes or sells it. The money that exists comes from specialty lenders, equipment and real estate lenders, revenue based funders and private credit, at higher prices. Hemp and ancillary businesses have more options. Below: who lends, what it costs, and what they ask for.

## Key facts
- **SBA and banks:** Decline plant touching businesses; hemp and most ancillary businesses can qualify
- **Who lends:** Specialty lenders, equipment and real estate lenders, revenue based funders, private credit
- **Typical cost:** 12% to 25% APR on term and equipment loans, factor rates of 1.2 to 1.5 on advances
- **Documents:** State licenses, compliance history, 6 to 12 months of bank statements, financials
- **Canada:** Legal federally since 2018; banks cautious, BDC and some credit unions lend

## Why will most banks not make cannabis business loans?

Because cannabis is a controlled substance under federal law, and a federally insured bank that lends to a business selling it takes on compliance risk and a loan it may not be able to enforce. Federal guidance lets banks hold deposits for licensed cannabis businesses with heavy reporting, and some do, but far fewer lend.

The SBA goes further: its rules exclude direct marijuana businesses and businesses that earn revenue from serving them, so [SBA loans](https://businessloanbroker.ai/business-loans/sba-loans/) are off the table for a grower, processor or dispensary no matter how clean the books are. Federal rescheduling has been debated for years; until the law and the SBA rules change, plan around private money.

## Who actually lends to cannabis businesses?

Five groups, roughly in order of how often they fund.

- Specialty cannabis lenders and private credit funds making term loans and lines to licensed operators, typically $250,000 to $20 million, secured by the license, equipment, real estate and a personal guarantee.
- Equipment lenders financing lights, HVAC, extraction and packaging through [equipment financing](https://businessloanbroker.ai/business-loans/equipment-financing/) or a sale leaseback of equipment you own.
- Real estate lenders making [commercial real estate loans](https://businessloanbroker.ai/business-loans/commercial-real-estate-loans/) against the building, at loan to value ratios of 50% to 65%.
- [Revenue based funders](https://businessloanbroker.ai/business-loans/revenue-based-financing/) sizing a dispensary business loan off daily sales, the fastest and most expensive option.
- Sellers on an acquisition, who often carry a note.
Our [lender directory](https://businessloanbroker.ai/lenders/) marks which lenders take cannabis files.

## What do loans for cannabis businesses cost?

More than the same loan in any other industry, because the lender pool is small and the risk is higher. Typical pricing at the time of writing: specialty term loans at 12% to 25% APR with 2% to 5% origination, equipment financing at 12% to 25% APR over three to five years, real estate loans at 10% to 16% with large down payments, and revenue based advances at factor rates of 1.2 to 1.5, which can mean an annualized cost well above 50%.

Terms are short, two to five years, and most lenders want a personal guarantee and a lien on the license where state law allows. Read [APR versus factor rate](https://businessloanbroker.ai/guides/apr-vs-factor-rate/) before comparing an advance with a term loan.

## Do hemp business loans work the same way?

No, hemp is easier. Hemp has been legal federally since the 2018 farm bill, defined by a very low level of the intoxicating compound, so banks, equipment lenders and the SBA can lend to a hemp farm, processor or maker of hemp derived products. Some friction remains: some banks lump hemp in with cannabis, product rules differ by state, and lenders remember the crash in hemp biomass prices, so they look hard at your buyers and margins.

Treat hemp as an agriculture or manufacturing loan with a compliance folder attached, and start with [agriculture loans](https://businessloanbroker.ai/industries/agriculture/) or [SBA 7(a) loans](https://businessloanbroker.ai/business-loans/sba-7a-loans/) for the cheapest money. Ancillary businesses that do not touch the plant, such as software, packaging and security, can usually use ordinary loans too.

## What documents will a cannabis lender ask for?

Your state license and its standing come first; a lapsed or provisional license stops most files. Then:

- Six to twelve months of business bank statements from a bank that knows it is banking cannabis
- Profit and loss and balance sheet with federal taxes shown, since section 280E leaves cannabis businesses paying tax on gross margin
- State tracking and compliance history, including any violations
- Ownership table, since owners above a set share are vetted
- Lease or deed, and the landlord's consent to cannabis use
- Equipment list with invoices, or the purchase agreement for an [acquisition](https://businessloanbroker.ai/business-loans/business-acquisition-loans/)
A cash business with no bank account is close to unfundable; a cannabis friendly bank account is the first step. The general list is in [what you need to apply](https://businessloanbroker.ai/apply/what-you-need/).

## Cannabis loans in Canada, and how to apply

Cannabis has been legal federally in Canada since 2018, which removes the legal barrier but not the caution. The big banks still mostly avoid licensed producers and retailers, while BDC, some credit unions and private lenders do lend to them, so the market is wider than in the US but still thin and expensive.

In both countries, apply once here with your licenses, bank statements and financials and your file reaches the specialty, equipment, real estate and revenue based lenders that accept cannabis. You can also ask your AI assistant to apply for you through our MCP server, as described in the [agents hub](https://businessloanbroker.ai/agents/). It is free to the business.

| Business type | Realistic products | Usually not available |
|---|---|---|
| Plant touching (grower, processor, dispensary) | Specialty term loans, equipment financing, cannabis real estate loans, revenue based funding, seller notes | SBA loans, most banks, most online lenders |
| Hemp (farm, processor, hemp derived products) | SBA 7(a) and microloans, bank term loans, equipment financing, agriculture lenders | Lenders that treat hemp as cannabis |
| Ancillary (software, packaging, security, landlords) | Most ordinary products, including SBA when revenue does not depend on cannabis clients | SBA if revenue comes mainly from cannabis businesses |

## Questions and answers
**Can a dispensary get an SBA loan?**

No. SBA rules exclude businesses that grow, process or sell marijuana, and businesses whose revenue comes from serving them, because marijuana remains federally illegal at the time of writing. A dispensary should look at specialty cannabis lenders, equipment financing, a real estate loan on its building, or revenue based funding instead.

**How much do marijuana business loans cost?**

Typically 12% to 25% APR on term and equipment loans from specialty lenders, plus 2% to 5% in origination fees, and factor rates of 1.2 to 1.5 on revenue based advances. Real estate loans on a cannabis property cost more than ordinary commercial mortgages and need larger down payments.

**Can I use a personal loan or home equity for a cannabis business?**

You can, and many owners do, but know the risk. A personal loan or home equity line used for a cannabis business puts your house and credit behind a business most lenders will not refinance. Ask a lawyer in your state first.

**Will federal rescheduling make cannabis loans easier?**

Probably, over time, but do not plan around it. Moving cannabis to a less restricted schedule would ease tax treatment under section 280E and could make banks more comfortable, but it would not by itself make SBA loans available or change bank compliance rules overnight. Lenders price on the law as it stands.

## Related
- [Equipment financing](https://businessloanbroker.ai/business-loans/equipment-financing/)
- [Revenue based financing](https://businessloanbroker.ai/business-loans/revenue-based-financing/)
- [Commercial real estate loans](https://businessloanbroker.ai/business-loans/commercial-real-estate-loans/)
- [Agriculture and farm business loans](https://businessloanbroker.ai/industries/agriculture/)
- [APR versus factor rate: how to compare them](https://businessloanbroker.ai/guides/apr-vs-factor-rate/)
- [Business acquisition loans](https://businessloanbroker.ai/business-loans/business-acquisition-loans/)

## Apply
Apply for the business: https://apply.businessloanbroker.ai/signup?levr_placement=md-cannabis
MCP server for AI agents: https://mcp.businessloanbroker.ai/mcp (docs: https://businessloanbroker.ai/agents/mcp/)