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Cannabis Start-Up Loans in Canada

March 22, 2023

Those who run cannabis businesses have already faced strict regulations about business licenses, purchasing real estate, and acquiring start-up loans. 

It’s tough for small business owners to get funding through a traditional bank or credit union since cannabis is still federal-controlled. However, with the growing popularity of cannabis and its legalization for medical and recreational use, pathways for business start-up loans have gradually become more available throughout the states and in Canada as well. 

There are alternative options to get funding for your dispensary or cannabis-related business in Canada. 

What Types of Cannabis Start-Up Loans Can I Get in Canada?

Based on where you live in Canada, a particular local municipality has its regulation you are to comply with. There are some funding options that you may use:


They are an efficient source for obtaining larger cannabis start-up-loans in Canada with more reasonable interest rates and better payment schedules. However, banks are not the best option for funding your cannabis business in Canada. They’ve strict requirements, and particularly new companies may face them. 

Credit Unions:

They are preferable for some borrowers in Canada due to the benefits they receive. The benefits may often be larger start-up loans, better payment rates, and more flexible financing conditions that may be more lenient than banks, especially for experienced business owners. They also prioritize that other members can invest in your cannabis dispensary.  

However, you’ll need to show a huge amount of patience while acquiring a business start-up loan from a credit union, as it may take a lot of time, money, and effort to join a credit union. Like banks, new cannabis business launchers in Canada may experience difficulties qualifying for business loans. 

Credit unions in Canada are non-profit institutes that work for their members. They don’t earn income in the same way that banks do. They don’t pay dividends to stockholders as in the case with banks, while in banks’ all incomes are paid back to members and stockholders. Banks usually earn by lending finances based on interest rates that can be higher than the loan itself. 

How the Government Funds Cannabis Business in Canada 

Government agencies in Canada are ready to provide cannabis small businesses with grants, start-up loans, government loans, and tax breaks to help them acquire necessary tools and equipment, finance marketing and advertising activities, improve cash flow, etc.

Suppose you are ready to comply with all the eligibility requirements and ensure to submit accurate funding applications to the corresponding state body of the Canadian government. In that case, you may be given the advantage of approving your application for funding your marijuana business. It’s worth mentioning that the government has offered nearly 1,000 funding programs to small cannabis businesses so far, which are the key to the further growth of the marijuana business in this country. 

Other Funding Alternatives in Canada 

Private Funding Companies

Some cannabis business owners often turn to private credit companies for funding and start-up loans. They may be good options for those with bad credit history, a low income, or debt difficulties. If you provide such companies with security options and a good business plan, you may win their funds. These alternative lenders charge higher rates and fees in exchange for smaller business loans. Besides, they are also harder to regulate. That’s why the risks of scams, fraud, and rapacious rates are higher too. 

Venture Capital 

This is another alternative option for funding and start-up loans for canna-business in Canada. Venture capital firms are emerging more and more in recent years to fund cannabis business owners. Such funding alternatives can be a solid option for cannabis businesses that don’t take on debt. Though it’s essential to notify you that receiving funding from a venture capital company means you will have to sell part of your marijuana business and dilute your ownership, this type of funding is known as equity financing. 

Business Line of Credit

Obtaining a business line of credit as funding for your marijuana business in Canada is a good option when paying utility bills, salaries, inventory refilling, etc. This type of funding provides your company with a revolving credit limit. It resembles a credit card, but interest rates are much lower. You may withdraw a specific amount and pay it back by monthly balances and partial payments.  

However, consider that a business line of credit will not provide you with much money based on your credit limit. Therefore, if you are new in this business and looking for start-up loans, then this funding option is not the best option for you. 


There is another option of funding in Canada, which is called crowdfunding. This is the way for marijuana businesses to raise money from a large group of people who exchange for rewards or a share of ownership. 

Merchant Cash Advance

This is the funding system in Canada that helps marijuana businesses secure funding. Your lender hands over a flat sum of money into your account directly, and you will have to return a specific percentage of your sales monthly until the entire loan is covered. Such funding is beneficial for marijuana businesses that have unpredictable sales volume every month. So if you have zero revenue for a particular month, you won’t have to pay anything to your MCA lender. One such MCA provider in Canada is 2M7 Financial Solutions.  

Equipment Loan

This loan can be used to lease or purchase the necessary vehicles, tools, or machinery for your cannabis business in Canada. However, consider that an equipment loan is secured against the equipment itself; therefore, the lender of this type of loan may legally resell and repossess it in case you have many unpaid months. 

Do I Need a Business Plan to Get a Loan For My Cannabis Dispensary?

Of course, most funding or start-up loan providers in Canada want to see a comprehensive business plan before handing their cash to cannabis entrepreneurs. It should display how your marijuana store will be able to repay the loan. It’s recommended to include all the corresponding details when preparing your marijuana business plan, such as:

  • License & Registration Info
  • Current & Projected Revenue
  • Debts, Assets & Liabilities
  • Owners, Partners & Investors
  • Staffing Details

Eligibility Criteria For Getting Cannabis Business Funded

It is essential to know the criteria of legal requirements before you seek funds for your cannabis business in Canada. You will need to ensure specific information in order to apply for funding or cannabis start-up loans in Canada in general. 

Try to provide the following documentation and information to succeed in quickly attracting investors for your business and ensure that you meet the eligibility criteria: 

  • Ensure you have an adequate credit score
  • Ensure a background check is completed along with a criminal record check
  • Prepare your business plan 
  • If you already operate  (provide the minimum gross monthly income report)
  • Register for a business bank account

For more detailed information, please, visit the following website.


Based on the funding information above, we may say that every type of funding in Canada has its advantages and disadvantages. Each of them requires accuracy to meet all the criteria the marijuana business loans require and to comply with the law and regulations. A reasonable business loan can help you achieve your goals and grow your business in revenue. 

By providing you with the guidance, we hope your decision to take on debt or give away equity in your business to accomplish your financing goals will not be so tough any longer.