How to Get a Loan to Open a Dispensary: 11 Creative Ways

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You want to enter into the cannabis industry, and now you want to know how to get a loan to open a dispensary. The legal sale of cannabis grew to $25 billion in the US in 2021, a 40% increase from 2020. It’s a budding industry that’s only beginning to flourish: cannabis is currently fully legal in 19 states and for medical use in 38—with more likely to follow. We could see more states open their doors to recreational marijuana use, creating more demand for businesses and dispensaries. 

If you want to be a part of this growing industry, you need to decide where you’d like to fit into the supply chain. One of the fastest growing sections of that supply chain is in dispensaries.

Startup costs for opening a dispensary range anywhere between $250,000 and $5 million, so unless you have the capital on hand, you might need to get a loan to start your business. But, how does anyone get a loan to open a dispensary? It’s not an easy task, to tell the truth. But if you know where to look and who to ask, it could be your lifeline to starting your dream business.

Money is not the only thing you must think about when opening a dispensary, as the laws and regulations are still very complex in the cannabis industry. First, you must check the legal requirements in the area where you are looking to start your business and ensure you comply with state and local laws. 

Next, you should obtain the licenses you need to operate a cannabis dispensary business in your state. Also, you should find an insurer who works with cannabis companies to get the right insurance policies for your business.

Let’s look into the challenges cannabis entrepreneurs face with financing, as well as tips on how to get a loan to open a dispensary. 

What Are the Challenges When Getting a Loan?

The biggest challenge when getting a loan to open a dispensary is finding a lender that is willing to work with you. Since cannabis is still illegal at the federal level, banks and other traditional lenders are often reluctant to provide loans for these businesses. They don’t want to risk any kind of prosecution for deciding to finance your business.

Another challenge you may face is a higher interest rate. Because of the risks associated with lending to a cannabis-related business, many lenders will charge a higher interest rate for these loans. This can make it more challenging to repay the loan and may end up costing you more in the long run.

Finally, you may also have to deal with stricter terms and conditions. Many lenders will require a higher down payment or collateral when lending to a dispensary. It’s not always because of federal legislation, though. It’s due to basic economics. There is less downward price pressure when there are fewer capital providers. That’s why cannabis businesses are still in a difficult position when looking to obtain funding through traditional channels. 

Luckily, there are alternatives that founders opening a cannabis dispensary can take advantage of when looking for funding options for their new company.

Common Types of Loans for Cannabis Dispensaries

When thinking about what kind of loan you need for your dispensary, you should consider what you need the money for and do your research so you can make an informed decision. Some loans are more suitable for companies looking to expand their operations than for founders who are just starting.

Let’s look into the common types of loans for dispensaries and discuss what they are typically used for.

Real Estate Loans

If you’re looking to finance purchasing or constructing a dispensary, you are probably aware of the laws and regulations limiting your options.

You might need to relocate to a different state, maybe somewhere where the costs of living and real estate are higher than what you are used to. If so, you may need to take out a real estate loan. You can use the funds to finance the purchase or improvement of commercial real estate and adapt it to your business needs.

One of the benefits of real estate loans is that they are typically long-term loans, which can give you more time to pay back what you borrowed. Additionally, real estate loans often come with lower interest rates than other types of loans, but they may also require a higher down payment.

Another benefit of real estate loans is that the property itself typically secures them. This means that if you default on the loan, the lender can take possession of the property instead of you having to put in your personal property or cash. Knowing that your assets are safe can give you some peace of mind when considering the benefits of taking out a real estate law.

Some founders can opt for an online dispensary without an actual physical shop. However, you might still need storage space for your goods, and a real estate loan could come in handy. AS you investigate how to get a loan to open a dispensary, keep this option in mind for allocating funds.

Inventory Financing Loans

Another option for financing your dispensary is an inventory financing loan. These loans are typically used to finance the purchase of inventory and can be a good option for dispensaries. Inventory financing is a short-term loan or revolving line of credit. Cannabis dispensaries can use this solution to purchase products they intend to sell later.

An inventory financing loan is beneficial when you need to stock your store with all the exciting goods that are now in demand, like certain edibles, drinks, and oils. You can do this before opening your dispensary or if you decide to expand your offer after starting small.

You should note that a short-term loan means you will have less time to repay the loan, and that could cause a stressful situation if your business doesn’t perform well at first. On the other hand, inventory financing loans often come with lower interest rates than different types of loans, and they could work as a quick fix if you need funds promptly. 

Also, the inventory you purchase acts as collateral for this loan, once again meaning that your personal assets are safe if you can’t pay back what you owe.

Term Loans

Many new cannabis firms, including dispensaries, prefer to obtain a sufficient amount of start-up capital before starting their operations to ensure some security. As you research how to get a loan to open a dispensary, term loans could be a convenient choice, as they are typically long-term loans and can give you more time to repay the loan.

When taking out a term loan, you receive a lump sum payment from the lender, and they return the money within a certain period of time, with interest you agreed on when signing your loan contract. Term loans often come with lower interest rates than other types of loans, but they may also require a higher down payment.

Woman finds out how to get a loan to open a dispensaryThis type of loan is also useful later down the road if you are looking to expand your business and, for example, invest in new locations, maybe even across state borders.


How to Get a Loan to Open a Dispensary?

Now that you know it’s not impossible to get a loan to open your dispensary, you should look more closely into your options. 

If this is your first entrepreneurial endeavor, you should consider partnering with companies that provide cannabis banking solutions and bridge the gap between banks and founders. Companies like Safe Harbor, Green Check, or Abaca provide banking solutions as well as the necessary support and expertise to help cannabis businesses navigate the lending process better.

Whether you choose to partner with someone or to start the search for how to get a loan to open a dispensary on your own, here are a few options to consider when deciding what works best for you.


While it might seem obvious, banks can help you with how to get a loan to open a dispensary. Local banks and credit unions may be willing to provide loans to dispensaries. Federal banks or banks operating on the national level are hesitant when it comes to working with cannabis companies because they are afraid of the repercussions involved with the industry that is still not legal nationwide.

Smaller banks may have the experience of working with other businesses in the cannabis industry, or they may be willing to work with you because of your personal relationship. Either way, having a bank backing up your dispensary business could be a good solution for you.

Given the specific circumstances surrounding the cannabis industry, chances are that the loan terms might not be as favorable as they would be for a less-risky business, but they should still be affordable. Compare interest rates, approval time frames, and down payment amounts to find the best option for your company.

Private Lenders

There are a number of private companies, such as Bespoke Financial or Avana Capital, that specialize in lending to cannabis businesses. These companies understand the industry and the challenges that dispensaries face and have specially-tailored solutions for dispensaries.

These firms, like traditional banks, typically make profits by financing debt. They charge interest rates on your loan, similar to regular banks. While rates are greater than in other retail industries, they provide an appealing alternative to other investment choices that need giving away equity in order to raise money to start your business.

Online Lenders

Online lenders, also known as alternative lenders, also provide loans to dispensaries. These companies are typically more flexible than banks and may be willing to work with you even if you have bad credit. If that is the case, you can expect higher interest rates and possibly less-favorable terms.

Another advantage you can expect from alternative lenders is the variety of financing options. You can choose a short-term loan if that’s what you need or another option that would be better suited for you. Before selecting your lender, ensure that you did your research right and that the lender you want to work with offers solutions for your type of business.

Angel Investors

Angel investors are individuals who invest in early-stage companies. Angel investors usually invest in technology startups, but some don’t shy away from the cannabis industry, either. These investors make riskier bets on up-and-coming firms that aren’t likely to receive backing from more established financial institutions but ask for equity in return.

Another good thing about working with an angel investor is that you can get access to their business network and contacts, which would be particularly beneficial if they have invested in cannabis dispensaries before or if they know people who did.

Venture Capital Investors

Venture capitalists are firms or funds that invest in early-stage or growing startup companies. They often invest larger sums of money than angel investors and may be more interested in a hands-on role in the company. They also demand equity in your venture in return for funds and access to their business connections.

You can find venture capitalists for your business in one of the cannabis private investment “ecosystems” or by attending events organized for current or future cannabis business owners. It is always a good idea to start with an online search for investors or these types of events or to ask for a recommendation from someone you trust.

If you decide to seek venture capital financing for your dispensary, you should note that you may need to purchase dispensary insurance for your business. Venture capitalists typically require that their portfolio companies carry adequate insurance because they want to protect their interests.

Additional Funding Options

If none of the options above feels right for you and you’re still wondering how to get a loan to open a dispensary, there are a couple of funding alternatives that you can consider for your business:

Social Equity Lending

Designed to bring equal opportunities into the cannabis industry, social equity programs offer loans to those that, for example, identify as Latino, black, female, indigenous, part of the LGBTQ+ community, or were affected by the War on Drugs. Social equity initiatives aim to create an inclusive atmosphere that will diversify the cannabis business environment.

If you qualify for a social equity lending program in a state where cannabis is not illegal, you can apply for a loan that could help you open your dispensary. At the same time, you would be a part of an effort to rectify injustices in the cannabis business ecosystem.

Friends and Family Loans

If you would prefer to partner with family members or friends when starting your dispensary, then presenting your business plan to them and asking if they would be willing to invest in it might be a good option for you. Remember that these people believe in you on a personal level, not just business, and they want you to succeed.

It might be a good idea to treat your friends and family as any other investors and present all the risks their investments could bring, not just the benefits. You might have to give them equity in your company, but the loan terms should be more favorable for you than with other investors. However, you should be extra careful with your friends and family as investors as you don’t want to put your relationships at risk.


Crowdfunding is a way to raise money from a large number of people. You can create a campaign on a crowdfunding platform, and people can contribute money to your dispensary. In return, you may offer rewards, such as merchandise or shares in the business.

While you may not raise all the money you need to open a dispensary, you will probably get some initial capital, and it would also be a great way to find out how people feel about your business idea.

Whatever you choose as your funding method, you should know that you get multiple tries to secure your loan, and you can also combine some of them to ensure you have enough funds for all your startup costs. Also, don’t forget to insure your dispensary, as insurance works as your financial safety net if something unpredictable happens.

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