Cannabis loan terms and rates

What cannabis loans cost in 2026

There is no published cannabis rate sheet. What exists is disclosure from lenders that file with the SEC, plus survey data on general small-business seller notes. Everything below is dated, because in this market a rate without a date is useless. Who these lenders are, and which ones take which deals, is covered separately in private credit and cannabis lenders.

Capital type	Cost, with date	Typical size and term
Bank-agented senior secured term loan, large MSO	Term SOFR plus 5.50%, 4% floor, so 9.50% at closing (Verano, 12 March 2026)	$195 million, three years to March 2029
Specialist cannabis mortgage lender	15.8% weighted average yield to maturity (Chicago Atlantic, 30 June 2026)	$10 million to $60 million target, two to three years
Business development company, cannabis legacy book	13.2% portfolio yield (Advanced Flower Capital, 30 June 2026)	$289.8 million across 17 companies
Seller note	General small-business notes commonly 6% to 10% (Morgan and Westfield data via Iconic, August 2026); cannabis notes negotiated deal by deal	Whatever the parties agree; often three to seven years
Equipment finance	No published cannabis benchmark; priced off the specialist range above	Asset-specific, three to five years

Two things follow from that table. The 9.50% is not available to you unless you are one of the largest operators in the country with a bank willing to agent the loan. And the gap between the 9.50% and the 15.8% is the price of being small, single-state, or newly licensed.

Debt is also most of the capital there is. The Viridian Cannabis Deal Tracker, as reported by MJBizDaily, put debt at about 94.8% of capital raised by U.S. licensed operators in 2025. Equity is not an easy alternative to an expensive loan right now.

Fixed, floating, and why the floor matters more than the index

Cannabis loans are not uniformly floating. Chicago Atlantic’s book at 30 June 2026 broke down as 46.0% fixed rate, 37.5% SOFR floating, 12.9% prime floating, and 3.6% other structures.

The floors are the part borrowers underestimate. The weighted average SOFR floor was 3.82% and the weighted average prime floor 7.15%. A floor means the benchmark can fall without your payment falling. If a lender quotes you SOFR plus 550 with a 4% floor, model the payment at the floor, not at today’s index, and assume you get no benefit from rate cuts until the index rises above it.

Ask for three numbers on any floating quote: the index, the spread, and the floor. Then ask what the rate would be today, and what it would be if the index fell by 200 basis points. If the two answers are the same, you are effectively on a fixed rate and should price it against fixed-rate offers.

How much will a lender advance?

Less than the business appears to be worth, because the most valuable asset usually cannot be foreclosed on cleanly. Chicago Atlantic’s published targets at 30 June 2026 are the clearest disclosed standard in the sector.

Metric	Stated target or actual
Loan to value	Under 60%
Senior debt to EBITDA	Under 2.0x
Real estate collateral coverage	1.2x
Weighted average loan to enterprise value	46.0% (actual)
Concentration	Top 10 loans were 67.5% of principal (actual)

Collateral is layered: a mortgage or deed of trust on owned property, a pledge of the borrower’s ownership interests, and UCC-1 filings over equipment and receivables. A licence itself is rarely pledgeable and almost never transferable to a lender without regulator approval, which is why a business whose value sits in a scarce licence in a limited-licence state still borrows against its building and its EBITDA. The collateral law is in seller notes and security interests, and purchase-money priority for equipment under UCC 9-324 is covered in equipment financing.

One more constraint that is specific to this industry: a lender who takes too much control, or too large a share of profits, can become a disclosable owner. Several states treat a significant lender as a true party of interest requiring disclosure and sometimes approval. Check that before you accept a term sheet with revenue participation. See true party of interest and financial interest rules.

Covenants you should expect

Chicago Atlantic describes its standard package as a debt service coverage ratio, limited indebtedness, deposit account control agreements, minimum liquidity, and monthly reporting. In practice that means:

1. Coverage tested regularly, usually quarterly, on a defined cash flow measure. Confirm whether the definition is before or after federal tax, because 280E can make the difference between passing and failing.
2. No new debt without consent, which blocks the equipment lease you were planning and the second-lien bridge you were keeping in reserve.
3. Deposit account control agreements, which give the lender rights over your bank accounts. In an industry where banking relationships are scarce, this also ties you to a particular institution.
4. Minimum liquidity, a cash balance you must hold and therefore cannot deploy.
5. Monthly reporting, not quarterly. Budget for the accounting capacity to produce it on time; missed reporting is the most common technical default.

Fees, amortisation, and prepayment

The headline rate is not the cost of the loan.

• Amortisation. Chicago Atlantic describes monthly amortisation of 50 to 150 basis points of principal. On a $10 million loan that is $50,000 to $150,000 a month of principal on top of interest. Verano’s loan amortises at $875,000 a month from April 2026 on $195 million.
• Prepayment. Institutional cannabis loans carry make-whole provisions or prepayment penalties. Verano’s carried a 1.50% premium in the first two years, then zero. Smaller loans often use minimum-interest periods or exit fees instead.
• Extension fees. Verano’s one-year extension option is conditional and carries a fee.
• Origination and diligence costs. Expect to pay the lender’s legal and diligence costs whether or not the loan closes.

Illustrative. A $5,000,000 three-year loan at 15.8% interest-only costs $790,000 a year. The same $5,000,000 at Term SOFR plus 5.50% with a 4% floor, at the floor, costs $475,000 a year. Add 100 basis points a month of amortisation to the second one and you are also repaying $50,000 of principal monthly, so total debt service is about $1,075,000 in year one. The cheaper-looking loan takes more cash out of the business in the first year. Compare total cash out, not coupons.

Why rates have not fallen

The April 2026 Schedule III order reached state-licensed medical marijuana and FDA-approved products, not adult-use. Most borrowers therefore still carry the full 280E disallowance, and depository rules for banks did not change. Lender commentary through August 2026 described equity capital as scarce and refinancing as difficult, and Advanced Flower Capital reported legacy cannabis loans on non-accrual after converting to a business development company with a broader mandate. Fewer dedicated cannabis lenders competing for the same borrowers does not produce lower rates.

How to compare two term sheets

Ask every lender for the same seven items, then compute total cash out over your expected hold.

1. Amount funded, net of all fees.
2. Rate: index, spread, floor, or fixed coupon.
3. Amortisation, in dollars per month.
4. Maturity, and the cost and conditions of any extension.
5. Prepayment premium, make-whole, or minimum interest.
6. Covenants, with the exact cash flow definition used for coverage.
7. Collateral and guarantees, including whether the lender becomes a disclosable interest holder in your state.

Across all industries, brokers surveyed for the IBBA and M&A Source Market Pulse reported sellers averaging 76% to 89% cash at close in 2025. Cannabis buyers cannot draw on the SBA or most banks, as set out in why SBA and banks are unavailable, so a realistic structure usually pairs a smaller senior loan with seller financing rather than stretching for leverage the cash flow cannot carry. If the target is already distressed, the arithmetic changes again; see financing a distressed acquisition. A 20-minute intro call can cover which structures a specific deal can realistically support.

This page is educational and is not legal, tax, or investment advice. Companies are named only because they publish filings that can be checked; none is a partner of this site, and nothing here is a referral, an offer, or a commitment to lend.