Equipment Financing

Cannabis Equipment Financing: Lease, Loan or Vendor Plan

The equipment secures the deal. That makes it one of the easier things to finance. Pick the structure that fits how long you will use the gear.

Updated October 202610 min readMeridian Private Line Editorial Team
Stainless steel processing equipment inside a clean laboratory with lit work surfaces

By the Meridian Private Line editorial team · Sources are listed below.

About this page: This is an informational overview built from public sources. Editors checked the cited sources. We have access to 75 lenders. Confirm details with the lender that best fits your situation.

Affiliate Disclosure: This site may earn compensation if you request a lender introduction. That does not change your terms. Full disclosure.

The short answer

Equipment financing uses the machine as collateral. That often makes approval easier than an unsecured loan.

Choose a loan to own it, a lease to use it. Compare total cash out before you decide.

On this page

  1. Lease vs loan for extraction and cultivation gear
  2. Equipment lender requirements
  3. LED, HVAC and POS financing
  4. Title liens and collateral
  5. A cost benchmark from public filings
  6. Vendor vs third-party financing
  7. Tax treatment
  8. A worked example: lease or loan on $250,000 of equipment
  9. A buyer's checklist
  10. Terms to know
  11. Frequently asked questions

Lease vs loan for extraction and cultivation gear

Lease or loan?Lease or loan?You need equipmentLoanYou own the assetHigher payment, builds equityLeaseYou use the assetLower payment, buyout at endVendor planSeller financesFast, compare the rate
Match the structure to how long the gear stays useful.

Lease vs Loan Cost Comparison

Compare total cash out for the same equipment.

How to use this: Enter the equipment price, the loan quote and the lease quote. The tool totals each path over its own term.

Loan monthly payment
Total loan cash out
Total lease cash out
Difference (lease minus loan)

Equipment lender requirements

Equipment lenders want to see the asset, the seller and your ability to pay.

ItemWhat the lender wants
Quote or invoiceFrom a real vendor, with serial numbers when available
LicenseActive and in good standing
FinancialsStatements showing payment capacity
InsuranceCoverage naming the lender as loss payee
Installation planSite ready, permits in place

LED, HVAC and POS financing

Lighting and climate gear drive cultivation cost. Savings on power can help justify the payment.

POS hardware is smaller and often rolled into a vendor plan.

  • Ask whether installation and training are in the financed amount.
  • Confirm warranty terms outlast the loan.
  • Check who owns software licenses.

Title liens and collateral

The lender holds a claim on the machine until you pay off the debt.

A blanket lien reaches farther than you may expect. Ask for a lien limited to the financed equipment.

Ask this: if you sell the facility, can the lender move the lien to the new buyer's equipment? The answer shapes your exit.

A cost benchmark from public filings

One public cannabis lender reports a 16.3 percent weighted average loan yield to maturity. Its 10-K covers senior secured loans to licensed operators.

Equipment loans are secured by the machine, so price follows collateral. Use that yield as an outer reference, not a quote.

Compare structures in our guide to line of credit vs equipment financing.

Vendor vs third-party financing

Vendors move fast because they want the sale. Their rate can reflect that convenience.

A third-party lender may price lower but ask for more paperwork.

Get both quotes. Then pick on total cost and speed.

Tax treatment

Lease and loan payments can be treated differently for tax. Cannabis tax rules add 280E on top.

Ask a tax professional before you pick the structure. The wrong choice can cost more than a rate difference.

A worked example: lease or loan on $250,000 of equipment

These numbers are an illustration. They match the comparison tool above.

The equipment costs $250,000. A loan needs $25,000 down at 14 percent over 60 months. The payment is about $5,235.

Total cash out on the loan is about $339,100. A lease at $5,200 a month plus a $25,000 buyout costs $337,000.

The difference is only about $2,100. At that margin, the right choice depends on ownership, tax treatment and cash today.

PathMonthlyTotal cash out
LoanAbout $5,235About $339,100
Lease with buyout$5,200$337,000

A buyer's checklist

Get two quotes

One from the vendor, one from a third party.

Check the term

Match it to the useful life of the gear.

Review the end

Buyout, return, renewal and fees.

Confirm insurance

Lender named as loss payee.

Terms to know

TermPlain meaning
Loss payeeThe party paid first if insured equipment is destroyed.
BuyoutThe price to own a leased asset at the end.
Title lienA recorded claim on the equipment.
Useful lifeHow long the equipment stays productive.
Residual valueWhat the equipment is expected to be worth at the end.
Vendor financingA plan offered by the equipment seller.

Frequently Asked Questions

Often yes. The asset secures the debt, so the lender takes less risk. Cannabis-specific compliance review still applies.
Lease if the technology changes fast or you need low upfront cash. Buy if you will use the gear for many years.
It records the lender's claim on the machine. You usually cannot sell the equipment until the debt is cleared.
Lenders do finance them, especially for retrofits that cut operating cost. Ask whether installation is included in the amount.
Many do. Vendor plans can be fast but may carry higher rates than a third-party lender. Get a competing quote.
How the figures work: Figures with a link come from the source named. Everything else is an illustration built on numbers you enter.

Sources and further reading

Not financial or legal advice. Figures in the calculators are illustrations built from numbers you enter. Cannabis remains federally restricted. Lender appetite and state rules change often. Confirm current terms with a licensed professional before you sign.