Understanding the Options
As the cannabis sector grows across the U.S., Texas investors and operators are positioning themselves for entry into cultivation and production. Whether you’re developing a new facility or looking to expand, the way you finance your property has major implications for liquidity, tax strategy, and long-term control. Two common structures — sale-leasebacks and traditional commercial loans — serve different business goals and risk profiles.
What Is a Sale-Leaseback?
A sale-leaseback occurs when a business sells its property to an investor and then leases it back for continued use. This approach converts illiquid real estate equity into working capital while maintaining operational control — a
Advantages:
- Immediate Liquidity: Unlocks cash for growth, equipment, or debt reduction without taking on new loans.
- Tax Deductions: Lease payments are typically deductible as operating expenses.
- Improved Balance Sheet: Frees capital and improves financial ratios.
- No Federal Lending Barriers: Involves private investors, avoiding banking restrictions that affect cannabis operators.
Disadvantages:
- Loss of Ownership: The property’s long-term appreciation belongs to the buyer.
- Fixed Lease Obligations: Rent remains due even during business slowdowns.
- Reduced Flexibility: Significant facility changes may require landlord consent.
How Traditional Commercial Loans Compare
Traditional commercial loans allow you to retain property ownership while financing construction or expansion. Yet, for cannabis operations in Texas, access remains limited due to federal banking constraints.
Advantages:
- Equity Growth: You build ownership and benefit from appreciation.
- Stable Terms: Predictable payments and interest rates support long-term planning.
- Asset Retention: The property stays under your control.
Disadvantages:
- Limited Access: Many lenders avoid cannabis-related financing.
- High Collateral Demands: May require substantial down payments.
- Debt Pressure: Monthly payments impact cash flow.
Which Model Fits Your Business?
- Sale-Leaseback: Ideal for established operators seeking fast capital to scale, modernize, or enter new markets.
- Commercial Loan: Better for companies prioritizing long-term equity growth and control — if they can secure compliant financing.
The Strategy That’s Right for You
Both strategies can work effectively depending on your growth stage and risk tolerance. Sale-leasebacks offer speed and flexibility in a challenging lending environment, while traditional loans reward stability and ownership. At Canvas Investments, we specialize in structuring cannabis financing solutions that help Texas businesses thrive — balancing liquidity, tax efficiency, and strategic growth potential.
