WHAT YOU CAN DO TO GET MORE CANNABIS FUNDING

WHAT YOU CAN DO TO GET MORE CANNABIS FUNDING

From Arkron Fletcher

All businesses, including cannabis businesses, are busy at this time of year. Although cannabis sales nationwide have increased dramatically with more states legalizing it, there are certain times of year when demand ...

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All businesses, including cannabis businesses, are busy at this time of year. Although cannabis sales nationwide have increased dramatically with more states legalizing it, there are certain times of year when demand spikes. The biggest holiday in the industry is 4/20. Sales for 4/20 increased by 75% in 2021, compared to the average for the previous year. 

 

Holidays such as Thanksgiving and New Year's are also critical to the cannabis industry, with 46% of its top ten sales days occurring between these dates. A record amount of $89.4 million was spent on New Year's Eve 2020 alone.

 

During holidays, it is vital that you can meet an increased demand. Nevertheless, not every cannabis business has the funds on hand to accomplish that goal. With cannabis financing, your holiday season can be as smooth as possible. 

Benefits of Cannabis Financing

There are several benefits to using cannabis financing to weather the holiday rush:

  • Make your inventory more extensive. It is possible to provide your customers with what they want by having the products available. Dispensary customers can also rely on manufacturers to have plenty of finished products such as weed seed packs and other bulk items for sale.
  • Promote your products effectively. A holiday marketing campaign can be launched with extra funds.
  • Pay overtime or hire extra staff. You might need to hire seasonal staff or compensate your existing employees for overtime when business is busier than usual. In this way, you can ensure that you have the people you require on board without worrying about how you will pay them. 
  • Complete purchase orders. If you receive purchase orders during a holiday rush, you can get the extra capital you need to cover them. 

Take advantage of Purchase Money Financing to get extra funds

During the holiday season, cannabis companies receive many purchase orders. During times of increased demand, they don't always have the capital that they need on hand.

Instead of turning away purchase orders, you can finance them to get the funds you need. The process is as follows:

Financing for Purchases

Consider a scenario where you're a manufacturer who received a purchase order for finished products from a dispensary. You need to make a purchase order for raw materials from a cultivator including hybrid cannabis seeds which are in-demand nowadays. Unfortunately, you lack the funds to do so. Therefore, you apply for purchase money financing.

Make your materials available for payment

You receive what you need from the dispensary when your lender approves your loan. 

Completing Your Purchase Order

Your lender is paid directly by the dispensary after they receive their delivery. In addition to the amount advanced to the cultivator, your lender keeps all fees accrued. The balance is returned to you. 

Manufacturers aren't the only ones who use purchase money financing. Others can benefit from it as well:

  • Cultivators 
  • Retailers
  • Distributors
  • Cannabis brands
  • Ancillary cannabis companies

You can substantially increase your purchasing power with purchase money financing. You can pay cash on delivery, which can result in a discount. The most important thing is that you can get what you need during the holiday season.

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