Private credit and cannabis lenders

Who actually lends to cannabis businesses?

A short list of lender types, each with a different appetite. Companies are named below only because they publish filings that can be checked. None is a partner of this site, and nothing here is a referral or a commitment to lend.

Lender type	What they fund	Typical borrower
Public mortgage REITs and credit funds	First-lien term loans secured by real estate, equipment, receivables, and equity pledges	Established single-state and multi-state operators, mostly in limited-licence states
Business development companies	Senior secured loans, now often across several industries	Lower middle-market companies; cannabis competes with other sectors for the capital
State-chartered banks and credit unions	Real estate loans, and participation in large syndicated loans	Operators with clean compliance files and owned property
Private individuals and small funds	Short-term notes, bridge loans, second liens	Small operators and buyers below institutional minimums
Equipment finance companies	Leases and loans on specific equipment	Cultivators and processors buying new gear; see equipment financing
Cannabis landlords	Sale-leasebacks, which are not loans but compete with them	Owners of cultivation and retail property; see sale-leasebacks

Debt is 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. The reasons ordinary banks and the SBA stay out are covered in why SBA and banks are unavailable.

What do public lenders’ filings show?

Filings are the only verified window into how this market works.

Chicago Atlantic Real Estate Finance. Its August 2026 investor presentation reports $453.1 million of loan principal across 26 loans at 30 June 2026, with the largest state exposures in Illinois (19%), Michigan (15%), Ohio (15%), California (14%), and Florida (14%). It describes its target as limited-licence, vertically integrated operators, with loans of $10 million to $60 million, terms of two to three years, and monthly amortisation of 0.5% to 1.5% of principal. The gross portfolio yield was 15.8%. It also reported a near-term pipeline of about $649 million under evaluation, which tells you demand for loans exceeds what gets funded.

Advanced Flower Capital. Formerly a cannabis mortgage REIT, it converted to a business development company effective 1 January 2026 with a wider mandate. Its second-quarter 2026 release shows a $289.8 million portfolio across 17 companies yielding 13.2%, and describes a focus on lower middle-market companies generally. On its August 2026 earnings call management reported three legacy cannabis loans on non-accrual and said access to equity capital in cannabis remains challenged, which makes refinancing harder.

Banks at the top end. Verano’s $195 million term loan, closed 12 March 2026, had a regional bank as administrative agent and a non-bank lender as co-agent. It priced at Term SOFR plus 5.50% with a 4% floor, or 9.50% at closing, maturing in March 2029. That is the best pricing in the sector, and it went to one of the largest operators. A single-store buyer should not expect anything close to it.

Pricing detail, fees, and covenants are on the separate page for cannabis loan terms and rates.

What do cannabis lenders underwrite?

They lend against cash flow but insist on collateral, and they check regulatory standing as closely as financials. Chicago Atlantic’s stated targets are a useful benchmark:

Test	Stated target or portfolio figure (30 June 2026)
Senior debt to EBITDA	Under 2.0x
Loan to value	Below 60%
Loan to enterprise value, portfolio average	46.0%
Real estate collateral coverage, portfolio average	1.2x
Security	Typically a first lien on the borrower’s assets
Covenants	Debt service coverage, limits on other debt, deposit account control agreements, minimum liquidity, monthly reporting

Expect a diligence list along these lines:

1. Licence status and history with the regulator, including any open violations.
2. Track-and-trace exports reconciled to the books and to tax filings; see verifying revenue with track-and-trace data.
3. Federal and state tax compliance, with particular attention to unpaid 280E liabilities and excise taxes.
4. Appraisals of real estate and equipment.
5. Cap table, financial-interest disclosures, and background of every owner.
6. Leases, landlord consents, and any management agreements.
7. A banked operating account the lender can control on default.

Illustrative: does a small acquisition fit?

A buyer wants a $2.0 million loan to buy a dispensary with $900,000 of EBITDA and no owned real estate.

• Debt to EBITDA is 2.2x, slightly above a 2.0x target.
• Real estate coverage is zero.
• The loan is one fifth of a $10 million minimum.

This deal fails an institutional screen on two of three tests regardless of the rate offered. It is a seller-note deal, possibly with a private second-position lender. Add a $1.5 million building and the picture changes: the same $2.0 million now has hard collateral, and a bank, credit union, or private mortgage lender may look at it.

Why can’t the lender just take the licence?

Because the licence is a regulated privilege, not ordinary collateral. A lender can take a security interest in equipment, receivables, real estate, and the owners’ equity, but stepping into ownership requires the same regulator approval as any buyer. The collateral law is explained in seller notes and security interests.

AFC’s handling of one defaulted borrower shows what enforcement looks like in practice. According to its August 2026 call, the lender commenced Article 9 foreclosures, pursued guarantees, faced active litigation from the borrower, and hired advisers to market the collateral, which includes vertically integrated New Jersey assets and Pennsylvania dispensaries. On another non-accrual loan, recovery is coming through a $12.5 million sale of two properties. Lenders price this friction into every new loan, and it is why they favour real estate and guarantees. Where a borrower fails outright, the usual tool is a state-court receivership.

Does the lender need regulator approval?

Often the lender must at least be disclosed. California’s 4 CCR 15004 treats a person who lends to a licensee as a financial interest holder, with an exemption for banks and financial institutions. Loan terms that share profit, grant board seats, or convert to equity can push a lender over the line into ownership. Put the loan into the change-of-ownership filing from the start; the framework is in true party of interest and financial interest rules.

How should a buyer approach private credit?

• Match the deal to the lender. Under roughly $10 million, do not build a plan around an institutional loan. Start with the seller, as set out in seller financing in cannabis deals.
• Lead with collateral and compliance. A clean licence file, reconciled track-and-trace data, and tax clearance do more for a credit decision than a growth story.
• Size debt to after-tax cash flow. Adult-use operators still pay tax under 280E, so coverage must be tested after tax.
• Read the exit terms. Two-to-three-year maturities mean you will refinance or repay soon. Make-whole and prepayment provisions decide what that costs.
• Compare the whole stack. The options side by side are on cannabis acquisition financing options.

This is educational material, not investment, legal, or lending advice. No lender named here has agreed to fund any transaction, and financing is never guaranteed.