As more states in the U.S. legalize marijuana for medical and/or recreational use, the opportunities for small business owners in these states are expanding exponentially. Proposition 64 was passed by California voters in November 2016, which allows the recreational use of marijuana by adults and the cultivation and sale of marijuana plants for personal use and by businesses with a license for these activities. If you are considering establishing a cannabis or marijuana-based business in the state of California, here are some of the most important facts you should know about obtaining a commercial mortgage for your new company.

Think Outside the Box

Because marijuana is still illegal federally,  traditional banks and financial institutions will be reluctant to provide funding for these business ventures. The Federal Deposit Insurance Corporation enforces strict regulations that may result in the loss of insurance for banks that offer loans to companies operating in violation of federal regulations.

As a result, you need to look at other sources for marijuana and cannabis loans.

Private investment firms and venture capitalists may be willing to provide funds for your commercial mortgage, especially if you can show evidence there is potential for profitability and you have a proven track record of success in your past business endeavors, but they will likely require an equity interest and possibly some control of your business.

Specialty Finance Lenders

Another option for financing marijuana and cannabis loans for the acquisition of real estate is through a Specialty Finance Lender. These loans can offer added flexibility for your business and cash flow.

ReProp Financial has been lending on real estate transactions wherein the owner’s or tenant’s business is marijuana or cannabis related for the last few years in AZ, OR, WA, and recently in CA with the passage of the Medical Marijuana Regulation and Safety Act (MMRSA) and the Adult Use of Marijuana Act (AUMA or prop. 64).  ReProp Financial only makes loans so there is not the threat of equity participation or control. ReProp also is very flexible offering loans as short as a One Year Interest Only Bridge loan to a Fifteen Year Fully Amortizing loan.  We structure the loan to fit the Borrower’s needs.

Creating the Foundation for Success

As with any financial arrangement, it is recommended that you put your financial affairs in order before applying for your mortgage loan. This can help you to make a positive impression on potential investors and can reduce the rate you pay for your mortgage, potentially saving you thousands of dollars on the cost of your new business premises.

Making sure that your documentation is in order and complete can also speed up the processing of your loan and can help you to begin your new marijuana business more quickly. Time is of the essence in obtaining a license to cultivate and sell marijuana in California. Getting a jump on the competition can be a solid step toward success for your new company.

Exploring your loan options and choosing the right solution for your financial needs can help you to achieve greater profitability in the expanding California marijuana marketplace. By looking outside the traditional lending marketplace, you may be able to realize your goals more easily and effectively.

If you are interested in obtaining a commercial mortgage for your marijuana/cannabis business in California, Oregon, Washington or Arizona, ReProp Financial can assist! Click here to read more about our policy for cannabis lending or click here to make a loan request.

PLEASE NOTE: Cannabis lending is limited to States where it is legal and have well-defined regulatory structures. Investors must be Accredited and qualified by ReProp Financial.

If you are interested in obtaining a small commercial mortgage for your marijuana/cannabis business in California, Oregon, Washington or Arizona, ReProp Financial can assist! Click here to read more about our policy for cannabis lending or click here to make a loan request.

PLEASE NOTE: Cannabis lending is limited to States where it is legal and have well-defined regulatory structures. Investors must be Accredited and qualified by ReProp Financial.