In the past ten years or more, cannabis-related real the state has increased greatly. So as the interest of investors increases to finance the cannabis business, most especially the cannabis real estate loans.

In the year 2012 cannabis became legal in Colorado and Washington in the United States, these two states now consider cannabis as a recreational substance, hence other states have thereby loosened their restrictions on cannabis. At the moment cannabis is now considered legal in 18 states in the United States, only five states still consider cannabis illegal.

The cannabis business is now a very big money business. Since the state regulations have loosened, cannabis businessmen are anticipating investing in commercial real estate. Also, Cannabis Real Estate Financing is more practical and accessible in the states where cannabis has been legalized.


What Are Cannabis Real Estate Loans?

Cannabis real estate loans are the same as any other commercial real estate loan. The major factor that is put into consideration before you can get a cannabis real estate loan from the bank, is the law of the state where the bank is located regarding cannabis, that is, is it considered legal or illegal in the state.

In a state where cannabis is considered legal, all you need is a great product as well as a business plan, if you have these two the probability of getting a cannabis real estate loan is very high. In states where cannabis is considered legal, Cannabis Real Estate Financing loans are just the same as conventional real estate loans. Which will have sub interest of 5% at a standard 30- years amortization schedule.

On the hand, in States where cannabis is considered illegal or are used for medical purpose only, getting a cannabis real estate loan is a completely different case.

For you to be able to get cannabis real estate loans in these states will be quite difficult as banks or investors want to loan to businesses that have multiple streams of income. Since the cannabis business in these states is limited to medical use only, be for you get a bank that will be willing to loan you money, your production needs to be high before the bank will feel comfortable giving you a loan.

The high level of regulation in medical-only states makes it very difficult for cannabis businesses to have all the qualities the bank requires from them to get a loan.


Federal Law Regarding The Cannabis Business.

There is always a conflict between state law and federal law regarding cannabis, which in turn affects the cannabis industry greatly. Cannabis is only illegal in five states, but it is considered illegal at the federal level too. The federal restriction causes constant uncertainty for businessmen looking to venture into the cannabis business.

Presently, representatives within the house and senate are working to fix these conflicting laws. The SAFE Banking Act that was passed recently, is a reform that provides legal protection for ancillary businesses providing service to the cannabis industry. This bill was introduced by Congressman Ed Perlmutter of CO. This means that regardless of the federal government law on cannabis, banks would be protected when they loan money to cannabis businesses.

With the move toward federal legalization, some banks and lenders are still adamant about giving loans to only medical cannabis businesses.

Some of these banks prefer to lend to medical cannabis businesses because they feel these businesses have very low chances of being shut down by the federal government, hence their money is safe.

If you want to start a cannabis business in one of the states where it is considered legal, getting a loan is now easy as the government is now ensuring that banks give loans to this business not only because it benefits the state and its economy, but also because the government wants to discourage blank market operators from involving in shady businesses and get involved in legal businesses.


The Chains Of The Cannabis Business.

Just like the food business, there are three general processes cannabis undergo before it gets to the consumer.

These processes include the following:

  • Cultivation
  • Industry processing
  • Retail

Cannabis Farms: cannabis has to be grown in an outdoor space located in a rural area or indoors in a warehouse facility.

After cultivating and harvesting cannabis, it is then sold to the processing facilities, these facilities a responsible for curing, trimming, and processing the cannabis into the final product.Finally, it is sold to the retail which is then sold to the consumers.