4 min read
How to Get a Grant to Open a Dispensary
Modern society has opened its doors to the marijuana industry. More and more countries are legalizing both recreational and medical use of marijuana. It automatically means that more and more businesses and venture capitalists are looking to get into canna-business. However, due to the specificity of the product itself and the fact that countries and states, in particular, are highly cautious regarding cannabis businesses, it’s definitely not easy for every new company to succeed, and many companies are looking for grants and financial aid to get started.
In the US, cannabis is still under the control of federal law, which makes it very hard to find funds as a traditional credit line for your marijuana dispensary. This is because the banks are FDIC (Federal Deposit Insurance Corporation) insured and are subject to federal oversight.
If you are willing to open a cannabis dispensary in the states where marijuana is legal, there are some methods and sources to get business loans or funds for your company. Follow this guideline to learn more about how to get a grant to open a dispensary in legal states.
Cannabis business funding comprises all sorts of ways to fund dispensary enterprises, including short-term loans, equipment financing, venture funds, lines of credit, and more.
Define if You Prefer to Take a Loan or Equity.
Debt and equity are the ways to get capital for your new business. If you decide on debt, you will have to take a loan that you have to repay based on the set schedule; if you select equity, you will need to sell a piece of the company.
Take Out a Personal Loan.
There is an option of taking a loan for a cannabis business when entrepreneurs take a personal or business loan from another company to fund their startups. Suppose a marijuana business company can’t get funding. In that case, some entrepreneurs take loans from a different, non-cannabis business and then use those funds in a sub-loan to their marijuana business. Therefore, you will need a good credit score if you decide to get a personal loan.
It is the process when entrepreneurs exchange shares to get capital for the cannabis business. This type of funding is more attractive for new companies to get financing as they are not able to prove their profits. They have to work hard to persuade other entities to invest in their cannabis business.
The Points You Should Consider for Funding Your Dispensary
You should consider several points while searching for a grant to open your dispensary business. Determine whether you are a startup or revenue-generating business, or define what you will use the funding for – build-out, inventory, equipment, etc.
How to Qualify for Dispensary Loans?
If you run your business as an individual proprietor, your finances might significantly impact your personal credit score when funding your business. If you operate as a partnership, LLC, or corporation, there is a quite different application process for funding your cannabis dispensary business.
Prepare the Best Cannabis Business Plan
Create the best marijuana business plan possible to present to a loan granter. Try to cover all the essential information and show the lender how you will repay the loan. It will also be best to put in your business plan details about a space to be rented, licensing, supplies, employees, equipment, advertising budget, etc. Try to ensure precise information about how your marijuana business will get profit to repay the loan in a timely manner.
How to Find Partners for Your Business
Though you won’t be able to take out a traditional bank loan for your dispensary business, some other investors and co-signers will invest in your business if you provide them with the basic parameters of your business plan before co-signing.
The entities that are mainly highly interested in funding such businesses are venture capital, private equity funds, and angel investors (wealthy individuals, generally). Also, marijuana business consulting firms manage private funds and private providers of high-interest loans.
You will have to consider the following factors to enhance the chances of finding a partner for your marijuana business:
- Be incorporated (to have legal status)
- Have a business bank account (in the business name);
- Be a marijuana dispensary or grow operation that has been in business for at least six months;
- Have monthly gross sales of a fixed amount;
- Have a specific credit score
Click here below to start the application process for funding your marijuana business.
The growing cannabis business offers enormous opportunities for venture capital, private equity funds, and big institutional players to be leaders in the cannabis trade. Therefore, the chance of getting a grant for your marijuana dispensary business increases daily. However, we want to remind you that the regulatory system for the marijuana business is rather developed through the states that require accurate and precise compliance from your side as a cannabis business owner.
We hope this blog was helpful for you, and you will eventually be able to find a solution that works best for your enterprise.