How to Put Money Into Your NY Cannabis Dispensary (Owner Loan vs Investment Explained)

What This Page Covers

• The two legal ways to put money into your dispensary
• How to decide: loan or investment
• How repayment works
• How this affects taxes and banking
• What documentation you need
• Common NY operator mistakes

Why This Matters in New York Cannabis

New York dispensaries operate under:

• Strict ownership disclosure rules
• OCM financial transparency requirements
• Heavy banking monitoring
• High audit risk (including 280E impact)

When money moves between you and your business, it must be clear:

Is it a loan?
Or is it an ownership investment?

If you just label it “owner transfer,” it creates red flags.

The Two Ways to Put Money Into Your Dispensary

There are only two clean options.

1. Owner Investment (Capital Contribution)

This means:

You are putting money into the business as an owner.

What that means legally and financially:

• It increases your ownership basis
• There is no guaranteed repayment schedule
• You only get money back through distributions (if allowed and available)

Real Example

You put $150,000 into buildout costs.
It is recorded as an owner capital contribution.

You do not automatically get that $150,000 back.
You may receive distributions later if:

• The business has profit
• Cash flow allows it
• Distributions comply with operating agreement and regulations

2. Owner Loan (You Lend Money to the Business)

This means:

You are acting like a lender, not just an owner.

What that means:

• The business owes you repayment
• There should be written terms
• Repayment schedule should be clear
• Payments must be recorded as loan repayment (not income)

Real Example

Payroll is due.
You deposit $50,000 into the business.

You create a simple promissory note stating:

• Total amount
• Repayment schedule
• Whether interest applies

The business repays you monthly as loan repayment.

The Question Most Operators Actually Have

“Can I pay myself back?”

Answer:

• If it was an investment → You get paid through distributions (if allowed).
• If it was a loan → You get repaid under loan terms.

You cannot randomly transfer money out and call it whatever you want later.

Why Banks Care About This

Cannabis banks monitor:

• Owner transfers
• Large deposits
• Repayment patterns
• Undisclosed capital sources

If money flows in and out with no explanation:

It can look like:

• Hidden investors
• Undisclosed ownership changes
• Income manipulation
• Diversion of funds

That creates monitoring risk.

Why the IRS Cares

Under 280E:

• You cannot deduct most ordinary business expenses
• Cash management matters more

If owner money is misclassified:

• Repayments can be misinterpreted
• Distributions can look improper
• Audit scrutiny increases

Clean classification reduces risk.

Minimum Documentation You Should Have

If It’s a Loan

• Written promissory note
• Repayment terms
• Clear ledger entries
• Separate accounting line item

If It’s an Investment

• Written record stating it is a capital contribution
• Updated ownership records (if ownership percentage changes)
• Clear accounting entry

If it’s not documented, it becomes harder to defend.

Common NY Cannabis Mistakes

• Calling everything “owner transfer”
• Repaying yourself while payroll taxes are unpaid
• No written agreement
• Treating investor money like a personal loan
• Mixing owner loans and contributions with no accounting clarity

These mistakes increase:

• Banking risk
• Audit exposure
• Ownership disputes
• Personal liability risk

Simple Rule for Operators

Before moving money:

Ask one question:

Is this a loan or an investment?

Decide first.
Document it immediately.
Record it correctly.

Do not fix it later.

Go Here Next

• Why Did My Cannabis Bank Close My Account?
• What Is a Suspicious Activity Report (SAR)?
• Why Your POS Must Sync With Banking
• Cannabis Banking Rules
• Can You Mix Personal and Business Funds in a Dispensary?
• How to Structure a Cannabis Business to Protect Your Personal Assets
• What Would the SAFE Banking Act Change?

Source Material

• What is §280E?
• IRS recordkeeping guidance
• Cannabis Banking Rules