Even though there are many states that have legalized both medical and recreational marijuana—it still isn’t considered “legal” by the federal government. What that means to entrepreneurs looking to open a dispensary is a traditional bank will likely not lend to a borrower for this purpose. And, in all reality, it may be a very long time until banks will be willing to lend to this industry. It is a very gray area when it comes to the Feds, the banks and the marijuana dispensary industry.
Even if the Feds approved of lending to dispensaries—banks still feel there are a lot of risks involved and not enough protection. The guidelines are so vague, making lending too risky, for the banks to conduct any marijuana related business.
Non-Traditional lending institutions are able to give loans to borrowers looking to open an Arizona marijuana dispensary. Every startup business needs funding to succeed in their market. If a borrower is looking to open a boutique or a restaurant they can simply get a Arizona small business loan from a bank, but because of the ambiguous legal issues when it comes to marijuana related business federal banks won’t participate in lending. The Federal Deposit Insurance Corporation (FDIC) will not insure a bank that takes on what they view as excessive risks—these would include loans that may be in violation of federal law. A non-traditional lending institution does not have to adhere to federal requirements as do traditional lending institutions.
Many private investors are backing medical marijuana businesses Private investors will typically require that a dispensary is incorporated, has a monthly gross sales of at least $8,000, has a business banking account and have a minimum credit score of 500. Private investors use the equity of the property as the collateral to secure the loan. If you live in a state, such as Colorado, there are a few banks that will work with a marijuana based business. However, in Arizona it is only legal for medical use and banks will not lend to marijuana dispensaries. Using a private investor in Arizona will allow a borrower to not only get a loan for the real estate, but also to purchase equipment necessary for a startup business.
Marijuana based businesses are rapidly growing. If you are looking for a small business that there is a high demand for—a medical marijuana dispensary is well worth looking into. Get yourself an Arizona private investor that will work with you and help you achieve your dreams.
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Dennis Dahlberg Broker/RI/CEO
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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