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Top Five Cannabis Loan Issues

As we inch closer to a cannabis recession, businesses are desperately looking for new ways to stay afloat. A few years ago, our cannabis attorneys saw equity investments left and right. It seemed like everyone wanted to own a piece of a cannabis business. But as things grow more precarious for the industry as a whole, cannabis loans have been on the rise. Cannabis lending allows the person with the money to still interact with a cannabis business without the same risk of loss that they’d have in an equity investment scenario.

You could write an entire post on the difference between equity and debt investments (and I have!), but the purpose of this post is only to look at debt financing (i.e., cannabis loans). In this post, I go through five of the main factors that set cannabis loans apart from your average commercial loan.

#1 Cannabis loans almost always have high interest rates

Many states cap the permitted interest on commercial loans, though they often have numerous exceptions. If an interest rate exceeds the permitted cap and there is no exception, the interest rate is deemed usurious, which can lead to claims against the lender and even a

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