Can a Cannabis Business Get a Merchant Cash Advance?
It's difficult, and most funders won't fund plant touching cannabis businesses because the activity remains illegal under federal law and banks and card processors avoid the money. A small number of specialty funders work with cannabis adjacent businesses, and those files need extra care.
Why do most funders say no to cannabis?
Marijuana is a controlled substance under the federal Controlled Substances Act, even in states that allow it. That creates real problems for a funder: the funding wire, the ACH debits and the bank accounts involved all run through banks that follow federal rules. Many funders simply exclude the industry, and their own banking partners require it. The federal schedule is set out in the Controlled Substances Act at 21 U.S.C. 812.
Does it matter whether the business touches the plant?
The line most funders draw is between businesses that grow, process or sell cannabis and businesses that serve them. A company that makes packaging, provides security, rents equipment, or runs a hydroponics supply store often has more options. Hemp businesses operating under federal hemp rules are treated differently again. The details matter, so be precise about what your business does.
What does a specialty funder look at?
- Whether the business holds a valid state license, if it needs one.
- How the business banks, and whether the account is with an institution that openly serves the industry.
- How sales are collected, since many cannabis retailers can't take standard card payments.
- Clean, consistent deposits over time.
How do you spot a bad cannabis funding offer?
Owners in hard to fund industries attract aggressive pitches. Read every contract closely, ask who the actual funder is and make sure the payment fits your deposits. A fast yes with unclear terms is a warning sign. This is general information, not legal advice. Cannabis law differs sharply between states and changes often, so talk to an attorney familiar with the industry.
Why is banking the first hurdle?
Even before a funder looks at sales, it has to confirm that the business can receive a wire and send ACH payments without problems. Many cannabis businesses bank with credit unions or smaller banks that serve the industry openly, and some rely heavily on cash. A funder needs a stable account in the business's name, used consistently. If your banking has changed several times, gather the history and be ready to explain it. A stable account relationship is often what separates a file that gets a look from one that doesn't.
How do card payments and processors fit in?
Many card networks restrict cannabis sales, so dispensaries often run on cash, debit workarounds or closed loop systems. A funder needs to see where the money lands. The simpler and more transparent the trail, the better your chances.
How can Afterfirst help with this?
Call 877-FUND-654 and tell us exactly what your business does and how it banks. If there's a funder in our network that works with your part of the industry, we'll tell you. If there isn't, we'll say so directly.
What else do owners ask about this?
- Why do funders turn down certain industries?
- Can I get an MCA with a low average daily balance?
- Do funders look at profit or revenue for an MCA?
More short answers on this topic are on the your business and your file FAQ, and the funder fit checker runs the numbers for your own file.
Where do these facts come from?
Have a question we didn't answer?
Ask us on the call. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.