4 Myths About Cannabis Financing

Share This Post

For many cannabis startups, the biggest threat isn’t failure — it’s running out of money. Cannabis financing can be difficult to navigate, and often, people simply don’t know that access to funding exists, much less how to get it. 

Because there are so many misconceptions about financing cannabusinesses, many startups don’t get the funding they need in the first place, or they run out of money down the road. 

Higher Yields Consulting 4 Myths About Cannabis Financing

By understanding the truth behind these common myths and reaching out to experts for additional guidance, you can avoid the mistakes that cause so many cannabis startups to miss out funding. 

Here are four common myths and misconceptions about cannabis financing — and why you shouldn’t let them hold you back. 

There’s No Way to Borrow Money in the Cannabis Industry

Many people believe that financing is impossible for cannabusinesses to get, but in truth, there are many avenues through which to obtain financing. The key is getting access to lenders in the cannabis space.

In a nutshell, obtaining cannabis financing is all about having a cash flowing business and knowing how to fracture the financing to focus on real estate separate from equipment. To do that, you’ll need to work with experts who can connect you with investors and help you prepare information and data properly.

While there are unique restrictions that need to be considered within the cannabusiness space, the funds are absolutely available — you just have to work with people who know how to get them for you.  Find a partner like Higher Yields that understands the space, has the proper network of funding partners, and can guide your business to the source that makes the most sense for you!

Cannabis Financing Is Too Expensive

Another common myth is that borrowing money for your cannabusiness means you have to take on huge interest rates or give up too much equity. But, again, that’s not necessarily true. It’s entirely possible to receive cannabis financing at a competitive rate to non-cannabis businesses, based on the prime rate

However, to get a good rate on your cannabis loan, you need a professional plan that can be presented to the leading financial players in cannabis. That means you need experts in your corner who can help you put that plan together. 

You Must Understand Financing Before You Take Funding

For many people, getting cannabis financing has been so difficult that they’re afraid to take it if they don’t fully understand how financing and investments work. They might worry, for example, that it will take forever to pay back investors or that they won’t have enough profit to pay themselves.

Higher Yields Consulting 4 Myths About Cannabis Financing

But it’s important to get started with cannabis financing ahead of time, even if you don’t personally understand all of it, so you can learn what options are available before you need them. The key is to work with trusted partners who can advocate for you and help you understand what you’re getting into.

Remember, by securing funding for your cannabusiness, you’re investing in yourself — so make sure you work with people who have the expertise to ensure you’re making a sound investment. 

It Should Be Easy to Get Funding for Cannabis

Since there’s so much money to be made in cannabis, many people believe they won’t have any problem securing funds. But, like with any other business, when applying for cannabis financing you’ll be graded by how you run your business and whether it’s able to make money — not by how profitable the industry is as a whole. 

Realistically, you probably won’t have people lining up to invest in your cannabusiness. You need to show more than high hopes and dreams of making money based on the performance of other businesses within the industry. That’s why it’s important to work with expert advisors who can help you define the best way to run your business so you can get the funding you need.

Don’t Let Fear Hold You Back

All too often, misconceptions and fears about cannabis financing hold cannabis startups back from reaching their potential. But these myths don’t have to stop you from getting the funds you need — with the right expert advice and assistance, you can succeed as a cannabis startup. 

Too many cannabusiness owners fail to recognize the importance of their business success. It is a business, and like any other business, success breeds success. Don’t underestimate the value of your cannabusiness and the work required to get it there.

Also, don’t forget about other business ventures that you may operate or have operated in the past. There are many lenders and investors that truly value your business experience; however, not all of lenders fit all circumstances. 

You need an experienced partner to define your unique needs and connect you to the right finance source for the greatest chance of success. The right partner is critical to highlighting the things that matter, and eliminating your fear so you can build the business you’ve been envisioning.

At HYC, we’ve been building cannabusinesses since 2007. Reach out to us today so we can help you strengthen your position, secure funding, and grow your cannabusiness.

Higher Yields Consulting Debit Cards, Compliance & Cannabis Payments
Cannabis POS Systems

Debit Cards, Compliance & Cannabis Payments

Payment processing in the cannabis industry poses a distinct challenge. The lack of federal legalization — and lack of participation from major payment networks — prevents the acceptance of debit or credit cards for cannabis

Read More »