You're gonna grow dope?
Did you know it's still technically illegal?
Your friends probably think you're making money hand over fist...
Unless they also operate a marijuana business.
Lenders won't exactly line up to provide you with financing - but there are a few.
Be prepared for rates on the high side - costs rise with risk, and it's hard to think of a riskier business than growing weed.
P.S. We hear from lots of pre-revenue start-ups that have ridiculous assumptions in their business "plans" ...
....like their CO2 extractor is going to net $100,000 a month...
...and then are surprised when the payments they are offered are higher than they had planned for.
Let's have a sober discussion about what real costs are to lease equipment for your "legal" cannabis business.
Here's a problem:
Most growing equipment is going to be hard to lease or finance.
...investors learned the hard way that you don't get your money back when you repossess light bulbs.
So... here's the deal...
It's much easier to fund your equipment if it's got resale value. Better if the equipment can be used in other industries than just the bud biz.
The easiest cannabis equipment to finance is:
- CO2 extraction equipment
- Lab Equipment (machines, that make chemistry happen... not beakers and stuff)
- Mass spectrometer equipment for testing
Goofy stuff like containers filled with grow lights and chillers is a much tougher sell to potential financiers.
Financing Rates for Marijuana Equipment Leasing
We tell people what they have to pay if they want someone to finance their marijuana startup...
...and they ask if we're stoned.
I mean, even if we were...
... those would still be the rates.
Here's the deal:
No, you can't finance your extraction machine for 5 years at 9% interest. I know some people will tell you that silly stuff.
If you believe them... you're probably stoned :).
Here on planet earth...
Take a $125,000 extractor (since that's what most of them cost...)
You have 2 basic options for financing:
A low down payment (10% or less) option is generally going to run $4,400 or so a month for 4 years.
That's a high payment.
Payments per dollar leased are lower if you make the deal less risky.
With a 40% down payment, payments on that same extractor would run about $2,400 a month.
To compare dollar-for-dollar... on that same $125,000 of financing... payments are around 10% less on the high down payment option than the low down option.
If you run a business in the medical marijuana industry and would like to learn about financing options, please call us at (949) 416-0374 or click in the picture below.