5 min read

Getting Cannabis Business Loan in Michigan

May 4, 2023

The cannabis industry is rapidly growing, with legalization spreading across the United States and other parts of the world. As a result, many entrepreneurs are seeking financing options to start or expand their cannabis businesses. In Michigan, where cannabis was legalized for adult use in 2018, many business owners seek financing solutions to support their ventures. However, due to federal restrictions, traditional lenders may be hesitant to offer loans to cannabis companies. Despite this, several financing options are available for cannabis business owners in Michigan, including credit unions, specialized lenders, and cannabis business loans. In this blog, we will explore these financing options and provide guidance for getting cannabis business loans in Michigan.

Federal Restrictions on Cannabis Businesses

At the federal level, marijuana is classified as a Schedule I controlled substance, meaning that it is considered to have a high potential for abuse and no currently accepted medical use. This classification makes it illegal under federal law, which creates challenges for cannabis businesses seeking financing. Traditional lenders, such as banks, are subject to federal regulation and may be hesitant to offer loans to cannabis companies due to the risk of legal repercussions.

Credit Unions

Credit unions can be a viable option for cannabis businesses in Michigan looking for financing. Unlike traditional lenders, some credit unions have started offering loans to cannabis businesses, including dispensaries, which can be structured as small business loans. However, since cannabis remains illegal at the federal level, credit unions that offer loans to these businesses take on a higher risk than traditional lenders, which can translate to higher interest rates and fees for borrowers. It’s important for business owners to carefully evaluate the terms and fees associated with credit union loans before deciding to apply. Despite the higher interest rates, credit union loans may be a good option for businesses that don’t qualify for traditional loans due to the federally illegal status of cannabis.

Cannabis Business Loans

Cannabis business loans are another financing option available for cannabis companies in Michigan. These loans are offered by lenders who specialize in serving the cannabis industry and understand the unique challenges and opportunities of operating in this space. Because these lenders are specifically focused on the cannabis industry, they may be able to offer more flexible terms and lower interest rates than traditional lenders.

However, as with any loan, it’s important to consider the terms and fees associated with cannabis business loans before taking them out. Business owners should thoroughly review the loan agreement, including the interest rate, repayment terms, fees, and penalties. They should also consider their business’s cash flow and ability to make timely payments.

Additionally, it’s essential to work with reputable lenders who are transparent about their lending practices and have a proven track record of working with cannabis businesses. Due to the federally illegal status of cannabis, it’s important to ensure that lenders comply with state regulations and have the necessary licenses to operate in Michigan.

Cash Advances

Cash advances are a type of short-term loan that cannabis business owners widely use in Michigan to secure quick financing. However, it may not be suitable for businesses that require long-term funding. Cash advances provide businesses with immediate access to capital, which can be used to cover short-term expenses, such as inventory purchases, equipment upgrades, and employee salaries.

The primary benefit of a cash advance is its speed and convenience. The application process for a cash advance is typically straightforward, and approval can be granted in as little as 24 hours. This makes it a popular option for business owners who require immediate funding to address urgent needs.

However, cash advances can also have high-interest rates and fees, which can add up quickly, resulting in a significant financial burden for the borrower. Therefore, it is essential to carefully review the terms and conditions of the cash advance and calculate the total cost of the loan, including any fees and interest rates, before making a decision.

Cannabis Real Estate Loans

Cannabis real estate loans are a specialized type of financing specifically designed for property acquisition in the cannabis industry. These loans are ideal for business owners who own their dispensary buildings or are looking to purchase new properties in Michigan to expand their businesses. Real estate loans are considered long-term financing options, offering several benefits over other types of loans. One of the primary benefits of real estate loans is that they usually come with lower interest rates than other loans. This means that you will pay less interest over the life of the loan, making it a cost-effective way to finance your cannabis business. Also, real estate loans typically have longer repayment terms, so you will have more time to pay off the loan. This can be especially beneficial for businesses just starting and needing time to establish themselves before making significant repayments.

Factors Lenders Consider When Evaluating Applications

When applying for a business loan for your cannabis business in Michigan, lenders will consider several factors, including your credit score, business plan, and cash flow. It’s important to be prepared with all the necessary documentation and transparent with the lender about your business and its financial needs.

The Application Process

The application process for cannabis business loans can vary depending on the lender. Some lenders offer online applications, while others require in-person meetings. It’s essential to carefully review the application requirements and provide all necessary documentation to ensure a smooth application process.


In conclusion, several financing options are available for cannabis business owners in Michigan who need a business loan. While traditional lenders may be hesitant to offer financing to cannabis businesses due to federal restrictions, there are still options available through credit unions, specialized lenders, and cannabis business loans. It’s essential to carefully consider the terms and fees associated with each option before taking out a loan, and to be prepared with all necessary documentation when applying. With the right financing solutions in place, cannabis business owners can continue to grow and thrive in the ever-expanding cannabis industry. As always, it’s important to seek legal and financial advice before making any major financial decisions.