In Cannabis’ Credit Desert, Debt Financing May Be the Oasis Companies Need
Most cannabis companies encounter a similar hurdle: lack of access to capital. Traditional banks simply won’t lend to them, and firms that do offer financing typically compensate for increased risk by setting higher interest rates. Other challenges, including a confusing regulatory environment and higher effective tax rates due to U.S. Code § 280E, also add complexity. Yes, equity financing is still an option – but in an industry with such high growth potential, giving away shares of one’s company can be costly.