FundCanna Lands $60M Credit Facility for Cannabis Business Loans

FundCanna, a specialized cannabis lending firm, secured a $60 million credit line from an institutional investment manager this week, bringing the company's total available capital to approximately $75 million with $35 million ready for immediate deployment.

The financing partner manages roughly $40 billion in assets across its portfolio, according to FundCanna's announcement. The company did not disclose the investment firm's identity, a common practice in cannabis finance deals where institutional investors remain cautious about public association with the federally illegal industry.

"This partnership validates what we've known for years—there's massive institutional appetite for cannabis lending when the risk-return profile is properly structured," a FundCanna executive said in the company's statement.

The credit facility arrives as cannabis operators continue facing limited access to traditional banking services. Federal prohibition keeps most major banks out of the sector, creating persistent capital constraints for licensed businesses despite legal sales surpassing $30 billion annually in the U.S.

The Capital Gap

Specialty lenders like FundCanna have emerged to fill this void, though they typically charge higher interest rates than conventional business loans. Industry sources report cannabis loans often carry rates between 12% and 18%, compared to 7% to 10% for traditional small business financing.

The sector's lending market has grown substantially over the past three years. Several cannabis-focused debt funds raised capital in 2023 and 2024, including Chicago Atlantic Real Estate Finance, which manages over $1 billion in cannabis real estate loans, and Pelorus Equity Group, which closed a $75 million fund last year.

But institutional participation remains selective. Most large investment firms avoid direct cannabis exposure due to federal illegality and compliance concerns with bank regulators. Those that do participate often structure deals through subsidiaries or require anonymity.

Market Timing

FundCanna's capital raise comes amid renewed congressional attention to cannabis banking reform. The SAFER Banking Act, which would protect financial institutions serving state-legal cannabis businesses, has stalled in the House despite passing the Senate Banking Committee multiple times in various forms since 2019.

Without federal banking protections, cannabis companies rely on a patchwork of credit unions, regional banks willing to accept regulatory scrutiny, and alternative lenders. This fragmented system drives up costs and limits growth capital for operators.

The company plans to use the new credit line to expand its loan portfolio across multiple cannabis verticals, including cultivation, processing, and retail operations. FundCanna has previously focused on equipment financing and working capital loans for mid-sized operators.

What's Next

Industry observers note that institutional money has been circling cannabis lending for years, waiting for clearer federal signals. The Drug Enforcement Administration's pending decision on rescheduling cannabis from Schedule I to Schedule III could accelerate institutional investment, though it wouldn't resolve banking access issues directly.

Schedule III status would allow cannabis businesses to take standard tax deductions under Section 280E of the tax code, potentially improving their financial profiles and making them more attractive to lenders. But banks would still face federal money laundering concerns until Congress passes specific banking protections.

For now, cannabis operators continue paying premium rates for capital while the industry waits for federal reform that has been "just around the corner" for half a decade.

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This article is based on original reporting by ganjapreneur.com.