Cannabis was responsible for over five billion dollars in revenue during 2019. The industry is only expected to grow from here. By 2023, revenue is projected to reach over 20 billion dollars.
If you are interested in entering the cannabis industry or have been working with cannabis for a while, then you know there are plenty of costs associated with this booming industry.
Marijuana equipment is not cheap. For some, those costs outweigh the benefits of growing cannabis. But there is a way to use that equipment for more than just growing or processing.
Having access to cash makes it much easier to become a member of the cannabis industry. Learn how to put a sale-leaseback to work for you with our top three tips.
What Is a Sale-Leaseback?
A sale-leaseback occurs when an asset is sold by a company and then leased back to that same company under fairly standard lease terms.
The benefit of a sale-leaseback is that it helps free up some immediate cash for a business. One of the cons, however, is that lease terms can be prohibitively expensive.
Why You Should Consider Sale-Leasebacks for Your Marijuana Equipment
It’s no secret that having extra cash available is beneficial to any business.
Marijuana financing can mean the difference between a mediocre business and a booming one. By pursuing a sale-leaseback on marijuana equipment, you can free up some extra cash.
Let’s learn how to put that sale-leaseback to work for your cannabis business.
1. Reinvest Extra Cash
Say you’ve just started your cannabis business, and you’re strapped for cash. You have plenty of marijuana equipment, but you aren’t able to put it to use because you simply ran out of money.
2. Increase Tax Benefits
As a company transitions to a sale-leaseback, it opens up an opportunity for tax deductions.
A lessee could potentially benefit from deducting some or all of their lease payments based on the specifics of their new lease agreement. Your cannabis business can greatly benefit from specialized financing, and your equipment can give back with relevant tax deductions.
3. Stay Relevant
The cannabis industry was hit hard in 2020 when the coronavirus pandemic was ravaging the globe. The industry, however, remains overcrowded with businesses.
Utilizing a sale-leaseback will give you the opportunity to free up extra cash to reinvest in your company. The chance to commit more money to your company gives you a further advantage in an already competitive market.
A Sale-Leaseback May Be Your Ticket to Extra Cash
It’s great to put your equipment to work processing marijuana.
It’s even better to lease that equipment while investing in your company.
If you have questions about leasing in relation to your cannabis company, contact the Sweet Leaf Capital team today. Our experts are standing by, ready to assist you in making the best financial decisions for your marijuana business.