- Posted by Marijuana Marketing Xperts
- On May 18, 2022
- 0 Comments
Even though cannabis is going more mainstream every day, there are still some challenges in defeating those negative, preconceived notions plaguing it. As a result, figuring out how to get a business loan for a dispensary can feel incredibly difficult – or even downright impossible.
However, there are plenty of funding options for individuals seeking to open a dispensary of their own. You might just be surprised at what’s out there and how many reliable methods you have for funding your cannabis venture.
How and Where Can I Legally Open a Dispensary?
Choosing a location for your dispensary means knowing exactly where cannabis is legal – because you can’t launch a dispensary unless it’s in a state where marijuana legalization has been achieved.
You’ll have a far easier time securing funding for a dispensary in states where recreational cannabis is legal versus those where only medical marijuana has been legalized. Luckily, the list of states that have legalized recreational cannabis is constantly growing longer.
Once you figure out those details, it’s time to move into the next stage of dispensary business planning: getting funding.
How to Get Funding for a Dispensary
It’s not unusual for traditional banks to be hesitant about funding new dispensaries, primarily because cannabis is still technically illegal at a federal level. In the eyes of the bank, it’s a significant risk to give a business loan to an “illegal” business – because they could be federally prosecuted. Banks are insured by the FDIC, which means they are subject to federal oversight and federal laws.
But that doesn’t mean that getting a dispensary loan is impossible.
There are opportunities for entrepreneurs in the making, and your options are increasingly diverse as cannabis becomes more and more mainstream. We’re going to cover some of the most common ways to get funding to open a dispensary, so you know just what the possibilities are, including:
- Business loans (from standard and specialty lenders)
- Business partners
- Cannabis investment groups
- Capital brokers
- Friends and family
Business Loans for Dispensaries
First, let’s dive into the question that probably brought you to this page in the first place; how do I get a dispensary business loan?
The majority of major U.S. banks steer clear of dispensary loans, but there are specialty banks that are more open to the idea. Also, many credit unions are willing to consider providing a loan to a future dispensary owner.
As an entrepreneur, treat a dispensary loan just as you would any other “typical” business loan. That means having a clear and convincing business model to show the lender that you have done the work to plan a successful business – one that will make enough money to pay back the loan. Your dispensary business plan should address:
- The location/space you will be renting or purchasing
- Permits and licensing
- Marketing
- Equipment and supply
- Employees
There are cannabis consultants that can help you hammer out these details, and having an expert on your side can be especially helpful in this complex industry.
You should also figure out what kind of loan you need to open a dispensary. A basic line of credit to purchase supply is enough; for others, a long-term loan is a must to fund the entire business. The lender will expect you to have thought this through already and be able to make it clear during the application process.
Business Partners & Friends and Family
Suppose you’re a cannabis enthusiast that dreams of launching a dispensary. In that case, the odds are pretty good that you have at least a few friends or family members equally passionate about this powerful plant. You could consider joining forces with one or more of these individuals and developing a dispensary partnership. Creating a savvy way to accumulate funding and reduce your investment can also benefit you in the long run because they’ll be bringing their unique skill set to the table.
Even if you don’t personally know anyone that can go into the cannabis business with you, you may still be able to find a professional connection that’s ready to take the leap. Having these professional connections is where cannabis networking will come in particularly handy.
Cannabis Investment Groups
It’s no secret that cannabis is a lucrative business. Many investors are eager to stake their claim in the cannabis market, supporting cannabis entrepreneurs seeking to open dispensaries and other marijuana-related businesses.
Keep in mind that even though funding can be more accessible from cannabis investors versus banks, the interest rates will usually be higher. There may also be other unique terms (like shorter lending periods or “convertible debt”), so carefully review the proposed contracts.
Capital Brokers
Capital brokers specializing in cannabis businesses are another excellent option for dispensary owners searching for investors. A capital broker is a professional that locates potential investors and partners them with qualified entrepreneurs, making them the perfect connection between you and the money you need.
In many cases, working with a broker means being prepared to provide them with an ownership stake in your dispensary. If that isn’t acceptable in your business plan, then a capital broker might not be the right fit.
Build a Solid Business Plan for Your Dispensary with a Smart Marketing Strategy
If you’re in the process of finding funding for your future dispensary, it might seem too early to think about marketing – but actually, it’s a perfect time. Developing a business plan means having an effective strategy for dispensary marketing, and that’s where Marijuana Marketing Xperts can help.
We’re a full-service digital marketing agency specializing in working with cannabis clients, including dispensary owners, cultivators, marijuana doctors, and other cannabusiness owners. Our talented team understands the nuances of marketing in the ever-evolving cannabis industry and how to navigate advertising regulations, laws, and niche target markets. Together, we can develop a detailed strategy for dispensary marketing and make sure you feel entirely confident in your plan for the future.
For more information about opening a successful dispensary, connect with Marijuana Marketing Xperts today.
Image by Castleski/shutterstock.com
Marijuana Marketing Xperts (MMX) is a team of cannabis marketing experts that leads cannabis businesses and local dispensaries through the world of marijuana-focused digital marketing to increase online traffic, foot traffic, and sales. MMX specializes in search engine optimization, web design, social media, programmatic advertising and device ID targetting, and more.
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