Getting into the cannabis business takes money … and some of the go-to sources for money for small businesses are not available to those going into cannabis.
Andrew Kaye, an executive at the lender Sweet Leaf Madison, explains.
“Conventional lenders cannot lend into the industry. You can’t go and get a small business loan from the Small Business Administration,” he said. “Why? Because federally chartered anythings are prohibited from financing cannabis.”
Sweet Leaf Madison lends to those looking to get into cannabis. Kaye said it can take half a million to a million dollars to get a reasonable size retail operation up and running.
“The small- and medium-size enterprises need capital to get into it, but have, generally don’t have the security to back loans so you’ve got to get more creative,” he said.
Sweet Leaf will lend the hundreds of thousands of dollars for the equipment needed to get started. Kaye says this business may in time resemble the beer business — with national, craft, and micro cannabis growers.
Sweet started in Denver but has its eye on New Jersey, where 34 more licenses were awarded in April.
“These next 34 licenses, will probably be between eight months and a year before we’re gonna see product, and we will be financing those entities, said Kaye.
Kaye says anywhere from a few hundred thousand to a few million dollars in equipment is needed for a business that processes cannabis.