How To Finance Your Cannabis Real Estate Business

The cannabis industry is becoming one of the leading industries where businesses can make huge cash out of their activities. Be it the dispensary aspect of the business or the farming, the potential of making millions of dollars is possible.

But, more so, cannabis needs to be planted, nurtured and grown before being made into a final product. This shows that you cannot plant venture into a cannabis business without a physical space.

Presently in the United States, marijuana is still frowned against by the federal government, which makes it difficult for most individuals to expand their business horizons in the cannabis industry. In addition, several states have different rules and regulations governing the planting, sales and distribution of cannabis and its related products.

One of the initial obstacles for any cannabis retailer in the US is expanding their business and acquiring real estate properties that would serve as their business’s planting and processing facility. It is then imperative that many cannabis business owners explore various cannabis real estate loans options to acquire property to expand their business.

In this piece, we will talk about the importance of owning a property, how crucial it is to the success of your cannabis business, and the possible obstacles you might face while hoping to obtain a real estate loan for your cannabis business.

Where Can You Get A Real Estate Loan For Your Cannabis Business?

It is quite challenging to know that business in the cannabis domain struggles with many things, from rigid rules and regulations to securing loans that can be used to expand their business. More so, financial institutions and banks that are subjected to Financial Crimes Enforcement Network (“FinCen”) rules and regulations cannot provide you with any loans meanest for cannabis business expansion.

However, since the rule applies to Financial Crimes Enforcement Network (“FinCen”), obtaining loans from institutions governed by these rules is next to impossible, while private lenders fill the vacuum. Also, state licenced banks and other local credit unions are the most reliable solutions available for cannabis business owners who aim to expand their business.

Thai lenders are open to providing you with attractive loans to get your expansion on the move while purchasing real estate for your business is now becoming a reality.

With that being said, there are some obstacles that you would have to overcome if you tend to obtain loans from this organization that aren’t controlled by the Federal banking laws. The demand and supply laws come to play here because the cannabis real estate loans applicants are more than the loan suppliers in the United States, which eventually limits the supply of capital.

More so, the passage of the Agricultural Improvement Act of 2018 (the “Farm Bill”) has incredibly made cannabis become more lucrative. The general perception of marijuana is quite impressive and creates a  more recognized social acceptance.

How To Get The Cannabis Real Estates Loans

Getting cannabis real estate loans comes with many issues that need to be addressed before you can successfully secure one. More so, the high demand for loans from cannabis business owners to expand their business has begotten the shortage of cash supplies.

Therefore, one of the primary risks the lenders consider before offering a cannibals property loan is the viability of your cannabis real estate business and your ability to pay back the credit as stated in your application process.

More so, the challenges of if your cannabis property would eventually be used as collateral for the obtained loan. Besides, the lenders are always sceptical about the future regulations that might be salaamed on the production of marijuana, which can either be favourable for the business or not.

In addition, before the lenders hand you the property loan, you are expected to do the due diligence of market survey, extensive financial disclosure and how successfully your proposed cannabis business would be if you successfully obtain the property loan. Here are some key factors to be considered to determine if a borrower would successfully secure a cannabis real estate loan.

  • An existing real property would serve as the collateral for the loan you are trying to secure for your cannabis business.
  • Is there an existing business income to justify the expected expansion and the required amount of loan? These conditions will be reviewed, and details like your cannabis licence, information about the borrower and some other background checks will be performed.
  • The present status of your organization as a borrower in the organization would be verified as well. In addition, details such as business documents and operational permits would be reviewed.

Who Is The Appropriate Lending Platform For Cannabis Real Estate Loans?

Congratulation, you have scaled through the significant screening process for obtaining cannabis property loans. However, you must know where you can successfully secure the loan with minimal obstacles and other challenges. Until the federal laws that prohibit the use of cannabis is removed, various institutions would be shut against you as a borrower.

As Congress makes significant steps towards considering the Secure and Fair Enforcement Banking Act of 2019″ a/k/a the “SAFE Banking Act of 2019”), there is the possibility that more loans giving organizations would spring up. With that in mind, as of the present moment, only the state-controlled financial institutions are comfortable handing our cannabis property loans.

For cannabis borrowers located in the state of Colorado and Oregon, there is a robust law that has to enable the cannabis business to thrive, which consequently makes access to loans easier than in some other states.

Besides, most cannabis borrowers tend to find huge success with hard money loans. They could quickly expand their business operation, increase production, and increase overall sales. Securing a cannabis property loan can be the significant difference in making your cannabis business reach its full potential or crumble to the ground.

Necessary preparation must be made while also surrounding yourself with the right teams to enable you to secure the expected loan. Also, whenever you are securing a cannabis loan, ensure you negotiate as favourable terms as much as you can. Ensure your team is entirely in line with your vision and ready to propel your business to the right stage.