You’re running a cannabis business that’s finally gaining traction. Revenue is growing, you’ve got product‑market fit, and opportunities are everywhere — new locations, better equipment, bigger harvests, brand expansion.
But there’s one constant bottleneck: capital.
Traditional banks are still cautious. SBA loans are largely off the table. Investors want polished financials and a clear story before they’ll take a meeting. Meanwhile, competitors seem to be opening new stores and facilities every quarter.
This guide walks through practical cannabis business financing options, what they really cost, and what lenders and investors want to see — so you can decide how to fund growth and how to make your business lender‑ready.
Use it as a roadmap for conversations with:
- Specialty cannabis lenders
- Banks and credit unions willing to work with cannabis
- Private investors and funds
- Your CPA and advisory team
Why Cannabis Business Financing Is Different
Cannabis is a high‑growth industry, but it’s also still treated differently than other sectors in three critical ways:
1. Federal illegality and 280E
Because cannabis remains federally illegal:
- Many traditional banks and lenders won’t touch the industry
- SBA loans are largely unavailable to plant‑touching operators
- IRC Section 280E disallows most federal income tax deductions, which:
- Raises your effective tax rate
- Can make your financials look less profitable than your cash reality
Lenders and investors know this — and they price the risk accordingly.
2. Banking and payment constraints
Even in mature markets, cannabis operators often face:
- Limited access to mainstream banking and merchant services
- Higher banking and compliance fees
- A higher reliance on cash, which increases operational risk
This makes financial controls, reconciliations, and documentation far more important than in other industries.
3. Perceived risk and underwriting challenges
Many lenders still see cannabis as:
- Regulatory risk (licensing, enforcement, changing rules)
- Credit risk (limited operating history, volatile markets)
- Reputation risk (especially for institutions with conservative stakeholders)
That doesn’t mean financing is impossible. It means: You need to show a stronger, cleaner, more documented financial picture than a non‑cannabis business would at the same stage.
That’s where the right financing strategy and accounting support come in.
What Lenders and Investors Look For in a Cannabis Business
Before we get into specific options, it’s useful to understand what most capital providers want to see:
- Clean, GAAP‑aligned financials
- Accurate P&L, balance sheet, cash flow
- Proper handling of 280E, COGS, and inventory
- Consistent revenue and margins
- Stable or growing monthly revenue
- Healthy gross margin (and an explanation if it’s under pressure)
- Licenses and compliance in good standing
- Active state and local licenses
- No major unresolved compliance issues
- Systems and internal controls
- Reliable POS and inventory tracking (e.g., METRC where required)
- Strong cash controls if your operation is partially or heavily cash‑based
- A clear plan for using the money
- Specific growth projects (new store, expansion, equipment, marketing)
- Timelines, projections, and realistic assumptions
If your books are behind, inventory doesn’t tie to METRC, or your tax position under 280E isn’t clear, you’ll pay more for capital — or lose access to it altogether. This is exactly where Northstar Financial Advisory helps: we turn your numbers and operations into a lender‑ready story.
9 Cannabis Business Financing Options to Consider in 2026
No single option is “best” for every cannabis business. The right mix depends on your:
- License type (retail, cultivation, manufacturing, distribution, etc.)
- Stage (startup, scaling, multi‑store, MSO)
- Cash flow and profitability
- Collateral and assets
- Appetite for debt vs equity
Use these options as a menu — and remember you can combine several over time.
1. Working Capital Loans & Cannabis Business Lines of Credit
Short‑term or medium‑term financing to fund day‑to‑day needs: inventory buys, payroll bridge, marketing campaigns, or ramp‑up to a busy season.
Best for:
- Dispensaries and retailers with consistent revenue
- Cultivators and manufacturers needing to finance a production cycle
- Operators with at least 12–24 months of operating history
Typical structure (varies by lender):
- Term: 6–36 months for term loans; revolving for lines of credit
- Amount: Often tied to monthly revenue (e.g., 1–3x average monthly sales)
- Pricing: Usually higher than traditional small business loans; cannabis debt often comes at a premium due to perceived risk
Pros:
- Flexible use of funds
- Faster approval than large real estate loans or institutional equity
- Can be structured as a revolving line for repeated use
Cons:
- Higher rates than mainstream bank loans
- May require personal guarantees, strong cash flow, and robust financials
What lenders look at:
- Revenue consistency and growth trend
- Profitability or clear path to profitability
- Bank statements, POS reports, and financial statements
- License status and compliance history
How Northstar helps: We support operators by:
- Producing clean, lender‑ready financial statements
- Reconciling POS, METRC (where applicable), and bank data
- Building cash flow forecasts that show how the loan is repaid
2. Cannabis Equipment Financing & Leasing
Financing tied to specific equipment — grow lights, HVAC, extraction systems, manufacturing lines, packaging machines, POS hardware, etc.
Best for:
- Cultivators upgrading or expanding canopy
- Manufacturers investing in extraction or production lines
- Retailers upgrading POS, security systems, or display fixtures
Typical structure:
- Term: 2–7 years (aligned with equipment useful life)
- Collateral: The equipment itself (and sometimes additional security)
- Payments: Fixed monthly payments
Pros:
- Preserves cash for other needs
- Can be easier to qualify for than unsecured working capital loans
- Potential tax benefits (depreciation, where applicable, subject to 280E and entity structure)
Cons:
- You’re locked into payments even if business conditions change
- Mis‑sized financing (too much or too little) can strain cash flow
What lenders look at:
- Value and useful life of the equipment
- Your operating history and cash flow
- Vendor reputation and type of equipment
How Northstar helps: We help you:
- Model ROI on equipment investments
- Project how the payment schedule fits into your cash flow
- Book and depreciate equipment correctly in a 280E‑aware chart of accounts
3. Cannabis Real Estate Financing
Debt financing to purchase, build, or refinance cannabis‑related real estate: dispensary locations, grow facilities, manufacturing sites, warehouses.
Best for:
- Operators ready to own rather than lease key facilities
- Landlords serving licensed cannabis tenants
- MSOs planning multi‑site growth
Typical structure:
- Term: Often 5–25 years
- Collateral: The property itself
- Pricing: Generally higher than conventional commercial real estate loans due to cannabis risk
Pros:
- Builds equity in your facilities
- Can stabilize occupancy costs vs rising rents
- Attractive to certain lenders and investors who prefer secured, asset‑backed deals
Cons:
- Larger commitments and closing costs
- Requires strong financials and often significant equity injection
- Zoning and licensing risks tied to specific locations
What lenders look at:
- Appraised value and condition of the property
- Lease structure (if you are the tenant and owner through separate entities)
- Tenant/licensee stability and profitability
- Local regulations and long‑term viability
How Northstar helps:
We work with operators and cannabis‑focused landlords to:
- Structure rent and intercompany agreements
- Produce financial packages for real estate lenders
- Model post‑financing cash flow and tax implications
4. Merchant Cash Advances (MCAs) for Cannabis Businesses
Upfront cash in exchange for a percentage of future revenue (or daily/weekly payments). Technically structured as a purchase of future receivables rather than a traditional loan.
Best for:
- Retailers with strong daily sales but urgent short‑term cash needs
- Operators who can’t qualify for cheaper debt but need capital quickly
Typical structure:
- Short term, often repaid within 6–18 months
- Payments tied to daily/weekly revenue or fixed debits
- Effective cost can be high compared to other options
Pros:
- Fast approvals and funding
- May rely more on sales volume than profitability or credit scores
- Flexible use of funds
Cons:
- Among the most expensive forms of financing
- Daily/weekly payments can strain cash flow
- Multiple MCAs stacked together can quickly become unmanageable
What MCA providers look at:
- Average daily/weekly revenue
- Bank statements and POS reports
- Overall risk profile of your operation
How Northstar helps: If you’re considering MCAs, we:
- Help you compare the true cost versus other options
- Model the effect of daily/weekly payments on your cash flow
- Build a plan to refinance out of MCAs into healthier structures when possible
5. Invoice Financing / Factoring for Cannabis Operators
Financing that advances you cash based on invoices you’ve issued to other businesses (e.g., wholesalers, retailers, distributors).
Best for:
- Cultivators selling to distributors or brands
- Manufacturers and brands selling to retailers on terms
- Distributors with significant A/R balances
Typical structure:
- You receive a percentage of the invoice upfront (e.g., 70–90%)
- The remainder (minus fees) is paid when your customer pays the invoice
- Can be ongoing, with a facility limit tied to your receivables
Pros:
- Turns slow‑paying invoices into working capital
- Grows with your sales volume
- Often easier than unsecured debt if you have strong counterparties
Cons:
- Fees eat into margins
- Requires solid receivable management and good customer payment behavior
What financiers look at:
- Quality and diversification of your customers
- Invoice terms and payment history
- Your invoicing and collections processes
How Northstar helps: We help you:
- Maintain accurate A/R aging and collections reports
- Evaluate the impact of factoring fees on your margins
- Integrate invoice financing into your working capital strategy
6. Revenue‑Based Financing
Investors or lenders provide capital in exchange for a fixed percentage of your future revenue until a cap (e.g., 1.5–3x the original amount) is repaid.
Best for:
- Growth‑stage operators with strong recurring revenue
- Businesses that prefer no equity dilution but flexible payback tied to performance
Pros:
- Repayments scale with your revenue
- Typically no ownership dilution or board seats
- Alignment between funder and operator on growth
Cons:
- Total cost of capital can be significant
- Not suitable for businesses with highly volatile or unproven revenue streams
What funders look at:
- Historical revenue trends and margins
- Revenue predictability (subscriptions, recurring customers, strong brand)
- Clean, verifiable financials and bank records
How Northstar helps: We support revenue‑based financing by:
- Preparing detailed revenue and margin analyses
- Building projections that funders can trust
- Ensuring reporting systems can meet ongoing covenant or reporting requirements
7. Private Debt: Family Offices, Funds, and High‑Net‑Worth Investors
Loans or structured credit from private investors, family offices, or specialized funds that understand cannabis risk.
Best for:
- Operators with compelling growth stories and strong management
- Businesses needing larger financing than many online lenders offer
Pros:
- More flexible terms than standardized products
- Possibility of strategic partnerships or follow‑on capital
- Terms can be customized (interest only, PIK, warrants, etc.)
Cons:
- Extensive due diligence and negotiation
- May include covenants, board seats, or equity kickers
- Longer closing timelines than quick online funding
What they look at:
- Management team and track record
- Financial performance and growth potential
- Competitive positioning and regulatory risk
How Northstar helps: We help operators:
- Prepare professional investor decks and financial packages
- Build credible, 280E‑aware forecasts
- Support financial due diligence and data room setup
8. Equity Financing: Angels, Venture Capital, and Private Equity
Selling ownership in your company in exchange for capital — from angels, cannabis‑focused venture funds, or private equity.
Best for:
- High‑growth operators with scalable models
- Brands and MSOs targeting regional or national expansion
- Businesses willing to trade ownership for larger checks and strategic support
Pros:
- No required monthly debt payments
- Access to strategic expertise, networks, and follow‑on capital
- Can fuel aggressive growth
Cons:
- Dilution of ownership
- Potential loss of control depending on deal terms
- Longer fundraising cycles and heavy due diligence
What investors look at:
- Growth rate, margins, and unit economics
- Brand strength and competitive advantage
- Management team and governance
- Clear exit potential (M&A, eventual public markets, etc.)
How Northstar helps: We support equity raises by:
- Turning your raw accounting data into investor‑grade financials
- Modeling scenarios (base, downside, upside)
- Coordinating with your legal team on data and financial disclosures
9. Crowdfunding and Retail Investor Capital
Raising smaller investments from a large number of individual investors — often through equity crowdfunding platforms or Reg CF/Reg A offerings.
Best for:
- Consumer‑facing brands with strong communities
- Operators seeking to turn customers into investors
- Businesses needing modest capital without institutional control
Pros:
- Marketing and capital raise rolled into one
- Builds a base of engaged brand advocates
- Can be more inclusive than traditional VC
Cons:
- Compliance and disclosure requirements can be extensive
- Ongoing investor communications and expectations
- Platform fees and legal costs
What platforms and investors look at:
- Story and brand which resonate with consumers
- Financial viability and growth plan
- Compliance with securities regulations
How Northstar helps: We help you:
- Prepare the financial statements and projections required for offerings
- Build a clear use‑of‑proceeds plan
- Align your internal accounting with ongoing reporting obligations
Funding Challenges for Cannabis Startups (and How to Overcome Them)
Early‑stage cannabis operators face unique hurdles:
- Limited operating history → Harder to prove repayment ability
- High startup costs (license, build‑out, inventory) → Large capital need before revenue
- Little or no collateral → Tougher real estate or asset‑backed deals
- Higher risk premiums → More expensive capital
Ways to improve your chances:
- Start with smaller, focused raises: Fund the first location or phase, prove the model, then raise more on better terms.
- Combine sources: Example: modest working capital facility + equipment financing + friends‑and‑family equity.
- Invest in your financial infrastructure early: Professional bookkeeping, clean chart of accounts, and timely financial statements make even a small startup look more sophisticated.
- Be realistic about valuations and terms: Over‑optimistic projections and valuations can scare away serious investors.
Northstar helps startups build this foundation so early‑stage capital providers take you seriously.
Interest Rates & Terms: What to Expect in Cannabis Financing
Because cannabis is still perceived as higher risk, you can expect:
- Debt pricing above mainstream small business loans
- More emphasis on:
- Collateral
- Cash flow coverage
- Personal guarantees (in some structures)
While exact numbers depend on your profile and market conditions, general patterns include:
- Equipment and real estate financing often priced closer to secured commercial lending (with a risk premium).
- Working capital loans, MCAs, and revenue‑based financing typically carry higher effective costs, especially for riskier or early‑stage operators.
The key is not just the nominal rate, but:
- Total cost of capital over the life of the deal
- Impact on monthly/weekly cash flow
- Flexibility to refinance as your business matures
We help you run these comparisons so you’re not blindsided by the true cost.
Regulation, Banking Reform, and Cannabis Financing
Banking and financing conditions for cannabis will continue to evolve as:
- Federal policy proposals (including banking reforms) are debated
- More banks and credit unions cautiously enter the space
- Institutional investors gain comfort with the industry
Until federal law changes materially:
- Expect continued reliance on specialty lenders, private capital, and creative structures
- Assume that regulatory compliance and clean financials will remain critical differentiators in accessing reasonable capital
Northstar keeps an eye on policy and market shifts so your financing strategy can adapt — rather than reacting after the fact.
How Northstar Financial Advisory Helps You Get Lender‑Ready
Getting financing isn’t just about finding the right lender. It’s about presenting a business that lenders and investors want to fund.
Through our cannabis‑focused services — including 280E Accounting, Cannabis Accounting, Cannabis Bookkeeping, and Tax Compliance and Strategy — we help you:
- Build clean, accurate, audit‑ready books
- Separate COGS from 280E‑limited expenses
- Produce consistent financial statements and forecasts
- Align METRC, POS, and bank data for credible reporting
- Understand how different financing options affect:
- Cash flow
- Taxes
- Ownership and control
We also support cannabis operators with controller and fractional CFO services, so you have a partner to:
- Evaluate financing proposals
- Negotiate from a position of strength
- Communicate effectively with lenders and investors
If you’re considering cannabis business financing, a second set of eyes on your numbers and your strategy can make the difference between a costly deal and a smart one.
Talk to Northstar Financial Advisory about cannabis business financing and funding strategy.
FAQs
Can cannabis businesses get SBA loans?
In most cases, no. Because cannabis remains federally illegal, SBA loan programs generally do not support plant‑touching cannabis businesses. Ancillary businesses (serving the industry but not directly handling cannabis) may sometimes qualify, depending on their activities and the lender’s interpretation.
What credit score do I need for cannabis business financing?
Requirements vary by lender and product, but:
- Specialty cannabis lenders often place more emphasis on business performance and cash flow than just personal credit.
- That said, stronger personal and business credit can still improve your terms and options.
A cannabis‑savvy CPA can help you present financials that offset weaker credit where possible.
How long does it take to get approved for cannabis financing?
Timelines depend on the type of financing:
- Simple working capital loans or MCAs: sometimes days to a couple of weeks.
- Equipment or real estate financing: several weeks to a few months, including appraisals and due diligence.
- Private debt or equity deals: months, depending on negotiation and due diligence depth.
Having organized, current financials and documentation can significantly speed the process.
Can I get financing if my cannabis business isn’t profitable yet?
Yes, in some cases — especially for growth‑oriented businesses. Lenders and investors may fund:
- Businesses with strong revenue growth and a clear plan to reach profitability
- Startups with compelling locations, licenses, or brand positioning
However, expect:
- More emphasis on projections and your business plan
- Higher pricing and more cautious structures
Northstar can help you build realistic, defensible financial projections that improve your case.
What’s the difference between debt and equity financing for cannabis businesses?
- Debt financing means borrowing money you must repay with interest. You keep ownership, but carry the obligation.
- Equity financing means selling part of your company in exchange for capital. No mandatory payments, but you share benefits (and decisions) with investors.
Many cannabis operators use a mix of both over time, depending on stage, risk tolerance, and growth plans.
How do I prepare my financials before approaching a cannabis lender?
Before you reach out, you should:
- Bring your bookkeeping current
- Ensure your COGS and 280E adjustments are correctly applied
- Reconcile METRC, POS, and bank records
- Prepare recent financial statements and a basic forecast
- Organize key documents (licenses, leases, tax returns, cap table)
This is exactly the preparation work we do with clients before they go to market for financing.
Do you help cannabis businesses across multiple states or just in one market?
Northstar works with cannabis operators in multiple legal markets, including multi‑state operators (MSOs). We help you:
- Normalize financial reporting across states
- Understand how different state tax and regulatory regimes affect your capital strategy
- Present a coherent story to lenders and investors covering your entire footprint
How do I get started working with Northstar on cannabis business financing?
Start with a conversation about where you are and what you’re trying to fund:
- New location or license
- Equipment or facility upgrade
- Working capital and inventory
- M&A or roll‑up strategy
We’ll review your current financials, identify gaps, and outline how we can help you become lender‑ready and choose financing options that make sense.
Schedule a consultation with Northstar Financial Advisory to talk through your cannabis business financing goals before you sign your next term sheet.
Financing can accelerate your cannabis business — or strain it. With the right mix of funding options and a strong financial foundation, you can scale on your own terms and avoid expensive missteps.
Northstar is here to help you build that foundation and navigate the capital landscape with clarity.
