Investors Increasingly Seek Cannabis Debt Investment As An Opportunity To Diversify

The traditional business debt financing option is now fueling the future of cannabis, offering strategic returns for investors

More frequently than not, cannabis investors have typically been focused on investments. Early believers dove into the space, encouraged by wild speculation of future legalization. The rise of debt financing in the industry is just the latest opportunity to attract new investors to the space.

In today’s low-yield environment, investors are faced with a limited amount of attractive debt investment opportunities. Investors chasing yield have typically been forced to look at either distressed investment opportunities or illiquid markets. It comes as no surprise that investors have therefore begun exploring the cannabis industry to find higher yields without assuming the risk of distressed investments. For traditional debt investors, lending to the cannabis industry provides an opportunity to add exposure to a growing market with greater structural protections and diminished risk than traditional investments. 

Unlike investments, if a business defaults on debt, there are means to recover investor capital. The borrower’s assets, which can be in the form of licenses, equipment and inventory, can be sold to recoup money …

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