SBA and Cannabis

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by a searcher
in San Antonio, TX, USA

1h ago

SBA and Cannabis

Has anyone dealt with SBA financing for an acquisition in California where the target company is not a cannabis business, but has customers in the cannabis industry? For example, the target provides a normal service to licensed dispensaries, cultivators, or other cannabis-related businesses but does not grow, sell, distribute, transport, or handle cannabis itself. A few questions: Is any revenue tied to cannabis customers enough to make the business SBA-ineligible? Does SBA distinguish between directly participating in cannabis and simply providing services to cannabis businesses? Does the percentage of revenue coming from cannabis clients matter? Does the fact that cannabis is legal at the state level in California make any difference from an SBA/lender perspective? Have you seen lenders approve or reject deals like this? If SBA financing is not available, what alternative financing structures have worked? Would appreciate hearing from anyone who has dealt with this firsthand, particularly in California.

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reply by an admin 1h ago
from Massachusetts Institute of Technology in Portland, OR, USA

^redacted might be able to help with Cannabis.

reply by an investor 1h ago
from University of Wisconsin in San Francisco, CA, USA

Not sure about the SBA program specifically, but in my experience it's been very lender specific and they ebb and flow in terms of participating in the industry. I've seen regional banks (names you might recognize) get involved even in plant touching companies in CA. One private credit name who has been involved is Altmore, not sure how small or if they're still writing checks here but they might be a thread to pull on to get started. I would expect a bigger lender pool since you're a service provider, but again, depends on lender appetite. I would think the customer base is not really viewed as an attractive one today, but low concentration helps.