dispensary funding for cannabis startups

Opening A Dispensary? See How Funding Can Help


Thanks to the recent introduction of both recreational and medical marijuana, billions of dollars are being poured into this industry every month. The cannabis industry has been expanding all across the world.

Cannabis businesses are consistently finding new financing options. Even with thousands of businesses opening their doors, demand continues to outpace supply.

Of course, just because the marijuana business is currently booming, that doesn’t mean it will be easy for every new company to thrive. Finding business loans or other sources of funding can still be difficult for many marijuana businesses.

An Industry That Is Quickly Evolving

Since 2012, the cannabis industry has experienced a variety of changes.

Due to certain legal ambiguities, dispensaries might find trouble securing a traditional line of credit from private lenders, SBA loans, or accessing other financing solutions.

The Cannabis Industry in the United States

Most financial institutions will utilize a cautious approach. Though marijuana is currently legal in all of Canada and 18 US states, cannabis prohibition from the US federal government has still created some issues for those within the industry.

The Current State of the Marijuana Industry

The world has become much more open-minded to the marijuana industry. Contrary to decades past, many countries are now allowing both the recreational use of marijuana, as well as the use of marijuana for various medical purposes. The global market is moving in a very specific direction, which is why so many businesses and venture capitalists are looking to get involved.

According to one recent estimate, the global marijuana industry is worth more than 110 billion dollars. MMJ related businesses have been among the fastest-growing enterprises in the world. As of 2020, there are nearly 250,000 cannabis businesses and cannabis companies operating in the United States alone. With interest rates on current loans relatively low, now may be the perfect time to start a cannabis business.

Where is Marijuana Legal?

In the United States, both recreational and medical marijuana are still technically illegal at the federal level. This is why most traditional banks and lenders might be reluctant to actually fund a cannabis company.  In fact, it is still a restricted industry for most. 

However, the federal government rarely enforces these regulations and there are plenty of legal dispensaries operating throughout the country. It is not uncommon to see recreational and medical marijuana businesses at a shopping center or other place of business in many different states.

In fact, in some cases, these businesses might even be considered a “green tenant” that can qualify for special benefits.

In the US, medical marijuana is legal in 37 states and the recreational use of marijuana is legal in 18 states. Other states have also decriminalized marijuana, meaning the penalty for possessing small amounts of marijuana is very small. In all 50 states, the use of hemp products (usually marketed as CBD products) is completely legal, thanks to the somewhat recent Farm Bill.

Where can I legally open a dispensary?

Currently, the recreational use of marijuana is fully legal in four countries: Canada, Uruguay, Georgia, and South Africa. Many other countries have also introduced pro-legalization legislation.

What is dispensary funding?

This term is broadly used to describe any kind of cannabis business funding. This can include all sorts of ways to fund dispensary enterprises, including short-term loans, equipment financing, venture funds, lines of credit, and more.

As your cannabis company will quickly discover, the capital stack that makes the most sense for one company might not make sense for another. Cannabis business funding is notoriously challenging due to various legal, supply, and structural obstacles.

What components of my marijuana dispensary might need funding?

There are many different components of your marijuana business that might require outside funding. Whether you are looking for unsecured capital, venture capital, or other types of financing options, there is no denying this is a capital-intensive industry.

To start, you’ll likely need to establish a location for your operations. In addition to the building of the marijuana dispensary itself, you might also need to purchase or lease a retail building, invest in a grow center, or receive funding for some other marijuana based property type. Creating a detailed business plan will make it much easier to determine the type of property and real estate loans you might need.  Additionally, many dispensaries also need funds for construction, inventory or equipment.  

Purchasing Dispensary Equipment

Additionally, you’ll likely need to invest in the equipment needed for your dispensary to thrive. By using an equipment loan or some other type of equipment financing, you can invest in large-scale machines and the equipment needed.  All types of equipment may be financed or leased, from the display counters, signage, lighting to POS systems & more. 

How to open a dispensary?

Securing money for your cannabis will not be extremely difficult. But depending on where your business is located, your desired loan size, and the equity of the business owners, there might be some unique financing challenges you will need to address.

Before you can secure any revolving lines of credit or have success finding funding, you will need to create your own marijuana business plan. Be sure you are using up to date information and that your plan addresses every relevant component of business financing.

Questions for New Cannabis Businesses

Start by defining your product and your target market.

What makes your marijuana business different from the others in the area?

What is your breakeven point and when do you expect to break even?

What are your current real estate needs?

These are all questions that will be asked when you are applying for loans.

Figure out the type of cannabis business funding you need

Be sure to ask yourself about the kind of business financing you might need. Do you want just unsecured cash capital? Or are your business financing needs more complex? Do you need an equipment loan or equipment financing–or are you looking for a lender who loan money without any restrictions?

Most business owners will be eager to start the financing process. But if you jump in without doing your research, you’ll end up facing financial challenges.

Be sure to take the time to explore many different options.

How much does it cost to open a dispensary?

The amount it costs to open a dispensary, whether you are using a small business loan or any other type of capital, will vary. There are several different variables that your cannabis business will need to account for.

First and foremost, you will need to consider the state it plans to receive funds and conduct business in. While Colorado is among the cheapest states to open a marijuana business in, New York will be among the most expensive.  Rent and overhead can be a major factor in costs. 

What is the cost range for financing a dispensary?

The amount of money you’ll need when you decide to fund your marijuana business will also depend on the scale of operation, the current state of the market, the value of the real estate, needed equipment, and more.

At the lower end of the spectrum, the cost of opening a dispensary will be around $150,000.

At the higher end of the spectrum, you might end up spending near $2 million. This is why there is such widespread demand for different types of capital financing.

Things to Consider When Funding a Dispensary

There are many different things you’ll want to consider when finding capital or a loan for your marijuana business:

  • Are you a startup business?
  • Are you a revenue generating business?
  • What are you using the funds for?  Build out, equipment, inventory? 

From there, you can determine which is the best method of funding for you.  

Your desired loan size, your personal credit score, your long-term financing needs, and your preferred interest rate can all affect the solution that’ll be best for you.

Uses of a cannabis dispensary loan

In many cases, a cannabis dispensary loan will be unrestricted. With unrestricted or unsecured loans, cannabis businesses can use their cash in hand to pay for anything they want, including employee salaries, growth operations, equipment, and more.

These types of loans are among the most flexible within the cannabis industry, though you might end up paying higher interest rates.  However, a non-dilutive unsecured option is almost always better than giving away your hard earned equity. 

More than just unsecured capital

In other cases, your cannabis business loans might have restricted uses. For example, as you might expect, an equipment loan can usually only be used for actual equipment financing. And a real estate loan (such as a mortgage) can typically only be used for actually investing in real estate.  These would fall under secured loans that have a piece of collateral attached to the loan. 

How to get a loan to open a dispensary?

We make it easy at Upwise to get a loan to open your dispensary.  We have a full product suite of different financing options for marijuana dispensaries.  To apply complete the application, which is the first step in the application process. From there, a representative will reach out to discuss your business and options that best align with your needs. 

How to qualify for dispensary loans?

If your cannabis business can qualify for funding will depend on several factors. If you are operating your cannabis as a sole proprietor, then your personal finances and personal credit score might play a relevant role. But if you are operating as a partnership, LLC, or corporation, the cannabis business loan application process might look significantly different.

Whether you are applying for cannabis business loans, unsecured loans, equipment leases, lines of credit, cannabis facility loans, or anything else, you are going to need to do your homework.

When writing a business plan, you will want to create a wide range of possible projections. Your projections should include an expected, best-case, and worst-case scenario.


cbd dispensaries and retailers

You should also include other important financing details, such as the total cost of opening your business, your current loan situation, your anticipated business expenses, and your projected revenue streams.

Create a Detailed Dispensary Plan

The more information you can provide, the more likely you will be approved. You should also keep in mind that the best ways to fund a cannabis business will not always be the same. For example, medical marijuana dispensaries will usually go through a different application process than recreational cannabis businesses.

Where to get funding for a dispensary?

As the broader cannabis market becomes more open, finding financing options for your marijuana business has become a little easier. There are many different possible sources for funding, but knowing which ones will best fit your business is key.

How to Finance a Medical Marijuana Dispensary

Angel investors, M&A companies, and some alternative lenders can all help your business secure funding. Upwise Capital is a financing marketplace with the best cannabis capital sources for every situation.  

In other words, you are not without options. In many situations, you’ll want to consider combining multiple sources of financing into a comprehensive capital stack.  This ensures you’re getting the best cost of capital and saving on interest. 

future of cannabis dispensary loans

The Future of the Cannabis

As you can see, there is a lot to think about when financing a cannabis business. By comparing many different types of loans and financing options, you will eventually be able to find a solution that work for your enterprise.

Our team at Upwise Capital is here to assist you with every step of the way to secure whatever funding is needed to help your business grow. If you have any questions regarding how dispensary financing works, please call our team at 77-55-UPWISE or email [email protected].  You can also apply online for dispensary funding, so you can get back to work and running your business.

So…What do you think? 

We want to hear from you.  What do you think of this article and was it helpful in your search for dispensary loans? 

Let us know by leaving a reply below.   Feel free to share this article on your social media. 


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