Great Advice On Cannabis Real Estate Loans

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Over the space of ten years or more, the cannabis business has grown tremendously, then more people now have an interest in investing in the business, most especially through cannabis real estate loans. At the moment, in the US cannabis is considered legal in 18 states and illegal in only five states.

Taking a look at the cannabis business, you will realize that it is a lucrative business. As the majority of the states now consider cannabis legit, cannabis farmers and retailers are aiming to invest in commercial real estate. Besides cannabis mortgages is also a way for cannabis business owners to secure the loan for their business expansion as well.

To start your cannabis business you have to get real ate loans from banks. However, getting such loans can be quite tasking, but compared to before it is now much easier to get a cannabis real estate loan depending on the state of your state on cannabis (that it is, doesn’t the state you live consider cannabis illegal or le loan high.

 

Property Types That May Qualify For Cannabis Real Estate Loans.

Just like the food industry, cannabis undergoes three main processes before getting to the consumer. These steps include cultivation on the farm, industrial processing and retail.

To prevent industry monopolization from one state to another, the government stepped making sure one business doesn’t expand across each sub-industry. This means a farmer that cultivates cannabis, can not also have processing facilities, so also a retailer cannot also own a farm.

To get a cannabis business loan, each sub-industry has some advantages as well as disadvantages for getting the loan approved.

 

Cannabis Farms.

The first stage involved in the cannabis business is the cultivation of cannabis. Cannabis can be cultivated either indoors or outdoor. Cannabis is cultivated indoors in places such as warehouses.

Since the federal government has not legalized cannabis, the cultivation of cannabis asset class is the most difficult to get loans for. In a situation where cannabis gets shut down, all the lenders are left with is the land. The land is very valuable, but land that is located in the rural area will be difficult to sell and will not have much value compared to land in the urban area.

 

Processing Facilities

After the farmers cultivate and harvest the cannabis, they go-ahead to sell it to processing facilities. These processing facilities are usually big warehouses where the cannabis are been cured, trimmed, and processed into the final product found in the market.

In most states, just as in the food industry, it is required that all the processing details, additives added, ingredients, the CBD content, the THC content, and so on should be listed on the cannabis package. In most cases, the processing facility doesn’t package the cannabis before selling it to retailers, in that case, all the information should be provided to the retailers to put on the packaging.

To be in the business of cannabis processing, you have to get a license which is quite expensive, and also you might be required to get proof of product testing as well.

Although starting a cannabis processing facility business involves a lot of work, it is much easier to get loans from banks for these asset classes. Mainly because of the collateral that comes with the processing facility, collateral such as warehouses located in the urban areas, this makes banks more comfortable lending to this cannabis assets class, as they know their investment is secured, in the situation when things go south they can easily sell or rent out the warehouse and get their money bank.

 

Retail Dispensaries.

The retail dispensaries are the final stage of the process before the final product hits the market for consumers. At the retail dispensaries; is where the packaging, branding, and merchandising of the cannabis is done. For lenders, they find it very easy to lend to this asset class, mainly because if the federal government decides to consider cannabis as illegal all the state, it is very easy to convert the property type to other types of businesses.

In the phase of the cannabis business, there is less work involved but then a lot of money is been made. There is steady money coming in which always encourage banks to give cannabis real estate loans to these businesses easily compared to other phases involved in the cannabis business.