Pelorus Significantly Reduces the Cost of Capital for Cannabis-Related Businesses, Uplifting the Industry and Allowing Entrepreneurs To Thrive

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Federal regulations coupled with the U.S. government’s reluctance to decriminalize the cannabis nationwide have put many cannabis operations in peril, rendering them unable to qualify for conventional loans. To help combat this issue, lenders like the Pelorus Equity Group, a leading provider of value-add bridge commercial real estate loans to businesses operating cannabis-use properties, have stepped in to provide these businesses with the funding they need to succeed. One thing sets Pelorus apart from its peers: The company is actually lowering the cost of capital across the cannabis industry.

Because of the federal illegality of cannabis and the antiquated stigma that still exists around the plant, major banks and lenders have generally refused to work with cannabis companies. Most private lenders in the space have charged prohibitively high interest rates and have limited caps on the amount of money they can loan. In 2020, the average interest rates were 16% to 21%, and some interest rates ran north of 25%.

Most lenders also take a long time – often months – to actually process loan requests and reimburse borrowers for construction draws. Not only do these things stifle growth for cannabis operators, they essentially bar entrepreneurs who haven’t already amassed considerable wealth from entering the industry, perpetuating the ongoing social problem in cannabis. 

For cannabis companies that can and do opt to pay the high interest rates, the caps on the amount of money they can borrow at one time — typically only up to $3 million — often means they can’t finance the completion of a building project on one loan and need …

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