Launching or scaling a cannabis business in California is no small feat. Between strict regulations, high taxes, and limited access to traditional capital, entrepreneurs face a unique set of challenges. But with the state’s cannabis market expected to reach $7.2 billion by 2025, the opportunity is massive—if you can fund your growth effectively.
In this guide, we’ll walk you through how to fund your cannabis business in California, exploring lender options, legal considerations, and smart financing strategies that work in a federally restricted industry.
Despite being legal at the state level, cannabis remains a Schedule I drug federally. That creates major friction when trying to access traditional funding.
Big banks won’t lend due to federal laws
No SBA loans available to cannabis-related businesses
Cash-based operations limit credit history development
High startup costs for licenses, security, and inventory
Heavy taxation (e.g., California’s 15% excise tax + local taxes)
Result: Cannabis businesses must rely on alternative financing, private lenders, or creative capital strategies.
Retailers/Dispensaries
Cultivators (indoor, outdoor, mixed-light)
Distributors and wholesalers
Manufacturers (edibles, topicals, concentrates)
Testing labs
Delivery services
Ancillary businesses (software, packaging, security)
Each has different capital needs—licensing, equipment, real estate, inventory, and compliance costs all add up.
Private lenders fill the gap left by banks. Many offer customized loans for licensed cannabis businesses.
Common Loan Types:
Term loans (secured and unsecured)
Real estate loans
Equipment financing
Bridge loans or short-term working capital
Popular Lenders in California:
FundCanna
Bespoke Financial
Diamond Business Loans
Greenleaf Business Capital
Sweet Leaf Madison Capital
Pro tip: Interest rates may range from 12% to 30% depending on risk profile and collateral.
If you own your cultivation or retail facility, sale-leasebacks allow you to sell the property to a cannabis-friendly REIT or investor, then lease it back.
Benefits:
Unlock tied-up capital
Maintain operational control
No dilution
Best for: Cultivators or vertically integrated operators
While harder to secure, investors will fund cannabis companies with:
Scalable operations
Strong compliance history
Clear branding and growth trajectory
Sources:
Angel investors
Cannabis-focused VCs (e.g., Poseidon, Entourage Effect Capital, Gotham Green)
Equity crowdfunding platforms like SeedInvest or Fundanna
Receive capital in exchange for a percentage of future monthly revenue.
Fast approval
No equity loss
Flexible payments tied to sales
Best for: Dispensaries and brands with consistent monthly revenue
Need cultivation lights, HVAC systems, extraction equipment, or POS systems? Equipment financing is often available through cannabis-friendly leasing companies.
Advantages:
Preserves working capital
Tax-deductible payments
Assets may serve as collateral
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Ensure your business is state and locally licensed
Organize key financial documents
Decide if you want debt or equity funding
Research cannabis-friendly lenders or investors
Prepare a pitch deck or loan application
Review terms and negotiate interest or valuation
Deploy capital toward growth, compliance, or inventory
Cannabis-friendly lenders are more flexible but still require basic underwriting.
Valid California cannabis license(s)
Strong compliance record (no major violations)
Bank statements (3–12 months)
Monthly revenue of $20K+ (for revenue-based loans)
Collateral (equipment, inventory, or real estate)
California license and local permit
Business plan or executive summary
Lease or property ownership documents
Tax returns (if applicable)
Cap table (for equity financing)
Renovating storefronts
Opening new licensed locations
Adding curbside pickup or delivery vehicles
Packaging design
Social media and influencer campaigns
Educational events and community outreach
Lighting, irrigation, and environmental control systems
Extraction and post-processing equipment
Compliance software and traceability tools
Bulk flower or concentrates
Edibles, tinctures, or branded merchandise
Logistics and fulfillment costs
Business: West Coast Botanicals (Santa Rosa, CA)
Need: $250,000 for upgraded HVAC and POS system
Solution: Equipment lease through FundCanna
Outcome:
Increased monthly sales by 30%
Cut in-store wait times by half
Remained cash-flow positive during expansion
Takeaway: Leveraging equipment financing can deliver big ROI without draining working capital.
Federal tax law disallows deductions for cannabis companies, except for cost of goods sold (COGS). This means:
Higher effective tax rate
Increased importance of tight financial management
Capital must be allocated wisely
Most cannabis companies operate via credit unions or fintechs like:
Safe Harbor
Dama Financial
Abaca
Green Check Verified
Tip: Maintain full transparency and clean bookkeeping to stay compliant.
| Pros | Cons |
|---|---|
| Access to working capital and growth funds | Higher interest rates than traditional loans |
| No equity loss with debt financing | Limited pool of cannabis-friendly lenders |
| Specialized lenders understand your needs | Strict documentation and compliance required |
| Flexible structures (term loans, leases) | No access to SBA loans or federal programs |
Funding your cannabis business in California isn’t easy—but it is possible. Whether you’re starting a boutique dispensary, scaling a cultivation site, or building a consumer brand, smart financing gives you the capital and control to succeed in a competitive, regulated market.
Ready to grow your cannabis business?
Explore cannabis-friendly lenders, compare financing options, or speak with a cannabis business advisor to create a funding plan that fits your goals.