The biggest problem has been already discussed and that is the federal government stepping in and shutting down their merchant and bank accounts. I have heard many stories of this happening over the years. I've even heard the federal government stepping in and essentially pressing their landlords to evict the businesses. I believe that was in a national news article a few years back, but cannot remember 100%.

Either way, a funder would need to either be very short term with these deals or realize they are opening themselves up to the possibility of the business getting shut down (or simply incapable of being collected upon). This is before even thinking about whether or not the funder themselves could get into trouble. I would imagine if any funder consulted their legal counsel they would advise against it. After all, if a funding company is "buying the future receivables" of a medical marijuana business, then aren't they pretty much selling drugs?

Also, if your a medical marijuana dispensary and need a cash advance, I think you need to look at how much of your own inventory you are cutting into