How Equipment Leasing Works in the Cannabis Industry

How Equipment Leasing Works in the Cannabis Industry

The cost of equipment can make it much more challenging for entrepreneurs and investors to enter the cannabis industry. Equipment leasing, however, offers a more affordable option. With help from an equipment leasing and financing association, you can start growing cannabis and creating consumer products immediately without paying the high price of upfront ownership.

If “sticker shock” has prevented you from accessing equipment commonly used in the cannabis industry, equipment leasing companies could have offers that help you generate income quickly without spending a lot of money now.

What Types of Equipment Does the Cannabis Industry Use?

The type of equipment that you might lease or finance depends on how you want to make money in the cannabis industry. Some popular types of equipment leasing options include:

  • Irrigation systems that ensure your plants receive the optimum amount of water throughout their growing cycle.
  • Lighting that helps your plants grow quickly and healthy by putting you in control (this equipment is essential for indoor farms and grow operations).
  • Solar panels that generate electricity so you can power your warehouse or storefront without paying the hefty price of public utilities (and also letting you advertise your commitment to the green economy).
  • Packaging machines that help you create labels and packages that protect your products and follow your area’s regulations.
  • Extractors that can remove specific chemical compounds (such as THC, CBD, and terpenes) from cannabis and hemp, making it possible for you to create and sell a wider range of products, including edibles, tinctures, and oils.
  • Ventilation systems that improve air quality.
  • Dehumidifiers that pull moisture from the air to prevent fungi and other problems that can harm plants.
  • Greenhouses and grow tents that can extend your growing season.
  • Security camera systems that protect your property, cannabis plants, equipment, and other assets.

As you can see, some types of equipment leasing could apply to practically anyone in the cannabis industry while others are only interesting to people who rely on indoor cultivation and making consumer products.

The Cannabis Industry Relies on Private Equipment Leasing Companies

Most small businesses that wanted to borrow money would go to a bank or credit union to apply for a loan. Unfortunately, very few financial institutions will work with businesses in the cannabis industry. Despite growing legality at the state level, the federal government still considers cannabis and many cannabis products illegal. Banks and credit unions worry that financing cannabis businesses could get them in trouble with federal authorities. Understandably, they don’t want to take the risk.

Private leasing companies, however, don’t need to worry about following federal laws nearly as much as banks and credit unions do. Instead, they can extend private loans directly to you and other small businesses. This gives you an equipment leasing financing option that didn’t exist years ago.

How Much Does Equipment Leasing Cost?

The cost of cannabis equipment leasing and financing depends on many factors, including:

  • The type of equipment you want to lease.
  • Whether you want to lease new or used equipment.
  • Whether you prefer lease-to-own agreements.
  • Your credit history and credit score.
  • The amount of collateral you have to offset the risk of leasing expensive equipment to your business.

Typically, you can expect to fund your equipment through loans with interest rates between 6.99 percent and 19.99 percent. You will need a minimum 550 FICO score. You do not necessarily need to put any money down on the equipment since you can finance up to 100 percent of the lease or purchase through a private lender.

Many equipment leasing companies in the cannabis industry prefer to work with businesses that want to access at least $100,000 worth of equipment. If you have an exceptional credit score, however, you could qualify for $25 million or more in funding. The overall amount and the price you pay ultimately depends on you and what you want for your business.

Can Equipment Leasing Pay for Itself?

Many small businesses in the cannabis industry find that equipment leasing pays for itself as long as they can market their products profitably. Of course, there are no guarantees in a competitive marketplace. Leasing, however, makes it much easier for companies to explore new opportunities in the industry.

Lease equipment for your cannabis now by reaching out to qualified financing companies. While 420property does not provide leasing of funding, the website does help cannabis and hemp businesses connect with financiers that can offer affordable leasing agreements. Explore your options to find equipment leasing and financing that helps your business improve its harvest size or start making products that appeal to cannabis consumers.

June 23, 2021Comments Off

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