How to Get Started with a Cannabis Business Loan in California?

Before starting any business, you’ll want to get the lay of the land. 

What does that mean? 

You should not only have a comprehensive knowledge of the relevant industry, but also be aware of your competition, the risks associated with operating your business, and the earning potential you can expect if your business is successful. 

Since the cannabis industry is such a new and emerging market, having this knowledge and starting your business the right way is perhaps even more important. You’ll likely face more hurdles and uncertainty when starting a cannabis business than you would, say, opening up a hardware store on the corner of main street. 

Important Steps When Starting a Cannabis Business

Perhaps the most important first step to starting a cannabis business is developing a business plan. Having a well-thought out business plan is important for a variety of reasons, but most importantly, it will likely be a prerequisite to two of the most important steps in opening your business:

  • Obtaining a business loan
  • Applying for a business license 

Here’s what to Know When Exploring Cannabis Business Loans in California

Your best bet for obtaining cannabis business loans in California is going to be a commercial lender. Unlike most small businesses, which can rely on loans from a bank, that option is not available to cannabis businesses. Because cannabis is still illegal on the federal level (though it’s been legalized either recreationally, medicinally, or both, in almost all 50 states), federally-insured banks are unable to offer loans and financing to cannabis businesses. 

  • Commercial lenders are a great option for cannabis business loans in California

Commercial lenders are a great option for cannabis businesses. They aren’t subject to the same regulations as banks, and are able to freely loan money to cannabis businesses. There are a variety of reputable commercial lending options available to help with cannabis business loans in California, and separating the reputable lenders from the predatory lenders is one of the first things you’ll want to do when getting ready to apply for a cannabis business loan. 

  • Beware of predatory lenders

Because of the federal regulations prohibiting cannabis business owners from obtaining bank loans, many predatory lenders have popped up, willing to take advantage of the cannabis business owners’ need for quick financing. A good rule of thumb when searching for a reputable commercial lender is: the more they require of you, the more legitimate they are. A trustworthy lender will want to minimize its own risk by lending you money – it will want to make sure that you have a well thought out business plan, that your financial records are complete and organized, and that lending you money doesn’t present an unmitigated risk for the lender. A lender that isn’t concerned with that, is probably looking to take you for a ride. 

  • The importance of securing a cannabis business loan

Unless you are able to access private funds for your start-up cannabis business, obtaining financing will be an important first step to making sure that the rest of your business plans line up. You’ll need money to register your business, obtain licenses and permits, pay taxes, obtain product, hire competent legal counsel, and staff your business. 

Simply put, cannabis business loans in California are a necessary first step, possibly the most important step, to starting your cannabis business. The cannabis industry in California is constantly expanding, and the potential for profit is sizeable – but you’ll need a great start to put yourself ahead of the competition, and a great start begins with obtaining a business loan.