When it comes to borrowing money as a marijuana company, most roads lead to real estate.
“The industry has challenges accessing capital markets that other industries do not,” Travis Goad, managing partner at Pelorus Equity Group, said of plant-touching marijuana companies.
“In a fully developed market, there’s real estate as one lending source and then there are pure corporate loans as another lending source. In this space, the vast majority of financing is tied to your real estate,” added Goad, whose firm is a cannabis-focused real estate lender.
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Applications for cannabis business licenses often require proof of real estate, leaving precious little capital for successful applicants to get their companies up and running.
For marijuana businesses that own property, there are three main ways to borrow, according to Goad, who runs Pelorus’ New York office:
Real estate lending: These loans require borrowers to contribute 25%-40% in
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