Raising capital for a cannabis business can be one of the most challenging aspects of launching and scaling a company in this highly regulated, rapidly evolving industry. Many entrepreneurs instinctively think of venture capital as the go-to funding source. But in reality, venture funding in cannabis is highly selective, often limited to a small number of high-growth startups with unique market positions. So, what do you do if you’re a cannabis entrepreneur with a solid business plan but no VC connections? Fortunately, there are practical, strategic, and sustainable ways to raise capital for a cannabis business without giving up equity to venture capitalists.
Why Look Beyond Venture Capital?
One of the main reasons business owners seek alternatives to VC is the desire to maintain control. Venture capital firms typically require a significant equity stake in return for funding, along with decision-making power and influence over business operations. For cannabis entrepreneurs who are passionate about their brand and vision, this can be a dealbreaker. That’s where alternative funding strategies come in.
State of Traditional Lending in Cannabis
Bank loans are still off-limits for many cannabis businesses due to the federal legal status of marijuana in the United States. This has opened the door for a variety of private and non-traditional funding sources. The good news is, these options not only exist—they’re growing in popularity and accessibility.
What Alternative Lenders Are Looking For
The first step is understanding what lenders and investors outside of the VC space are looking for. Private lenders, angel investors, and family offices are now actively exploring opportunities in the cannabis sector, drawn by its growth potential and underserved market. They often look for strong fundamentals: a sound business model, a clear path to profitability, strong leadership, and compliance with local and state laws. These players don’t always need the hockey-stick growth projections that VCs demand, making them a better fit for many cannabis operators.
Debt Financing
One increasingly popular strategy is debt financing. Unlike equity financing, debt financing allows you to borrow money and repay it over time, usually with interest, without giving up any ownership in your company. For cannabis businesses, this often comes in the form of equipment loans, working capital loans, or even asset-based lending, where your inventory, real estate, or equipment is used as collateral. These loans are generally issued by private lenders who understand the nuances of the cannabis industry.
Exploring Revenue-Based Financing
Another proven route is revenue-based financing. With this method, the investor provides capital in exchange for a percentage of your future revenues until a fixed return is achieved. It’s a flexible alternative that aligns the investor’s success with your performance. While less common than traditional loans, it’s gaining traction in cannabis, where predictable revenue streams—especially from dispensaries—make it an attractive model.
Using Crowdfunding to Mobilize Community Support
Crowdfunding is also emerging as a powerful tool for cannabis startups and existing businesses. Platforms like Mainvest and Fundanna specialize in cannabis crowdfunding campaigns. Unlike GoFundMe-style donation campaigns, equity crowdfunding allows investors to receive a stake in your company, or you can structure campaigns where they receive revenue-sharing or product perks instead. The regulatory environment around crowdfunding is becoming more favorable, allowing cannabis businesses to raise funds from their community without involving institutional investors.
Strategic Partnerships for Growth Capital
Strategic partnerships can serve as a capital source without venture capital involvement. For example, a cannabis cultivator might partner with a distribution company that provides upfront capital in exchange for a long-term supply agreement. These mutually beneficial agreements allow both parties to grow together without diluting ownership or seeking external financing.
Leveraging Cannabis Real Estate Financing
Then there’s real estate financing. If your cannabis business owns or plans to acquire property, sale-leaseback agreements can be a viable option. In this model, you sell your property to a specialized cannabis real estate investor and lease it back over time. This allows you to convert a fixed asset into liquid capital without disrupting operations. It’s especially effective for operators looking to expand or reinvest in other areas of their business. Cannabis real estate financing is no longer a fringe concept—it’s a mainstream strategy in a capital-constrained industry.
Grants and Equity Programs
Grants are another overlooked resource. While rare, some local governments and social equity programs offer grants or forgivable loans to cannabis businesses owned by minorities, women, or individuals impacted by prior marijuana convictions. These programs don’t require repayment or equity exchange and are worth exploring if you qualify. Staying informed about changing state and municipal legislation can help you uncover hidden funding opportunities.
Generating Capital Through Pre-Sales and Subscriptions
One of the most creative ways to fund your cannabis business is through pre-sales and subscriptions. If you’re launching a dispensary or product line, consider building hype through pre-orders or subscription boxes. This strategy can generate upfront revenue, validate market demand, and give you working capital to get off the ground. It’s a grassroots approach, but in a community-driven industry like cannabis, it can be incredibly effective.
Friends, Family, and Personal Investment
You should also leverage your existing network. Personal savings, friends, and family remain one of the most common sources of early-stage funding. While it’s not without risk, borrowing from people who believe in your vision can be the bridge you need to reach profitability. Just make sure you structure any personal loans or investments properly, with clear terms to avoid misunderstandings down the line.
Presenting Yourself as a Serious Business
Finally, having a strong digital and operational presence boosts your credibility. Lenders and alternative investors will want to see that you’re serious: updated financials, a polished pitch deck, compliance documentation, and a clear plan for how funds will be used. This professional polish can make the difference between rejection and approval, even in a high-risk sector like cannabis.
Raising capital outside of venture funding doesn’t mean settling for less—it means playing smarter. From cannabis real estate financing to strategic partnerships and revenue-based models, a growing ecosystem of funding options is emerging, tailored to cannabis businesses of all sizes. Need help looking for the right financing partner? Alta Real Estate Fund specializes in providing capital for a cannabis business tailored to your goals. Contact them via email or by visiting their website.