How to Get Money for Your Medical Marijuana Business
Every startup needs proper funding so that they may succeed in their respective market. Since the marijuana business is known for having an ambiguous legal status, banks avoid giving out loans for such ventures. Finding investors to loan you money in order to establish a medical marijuana business is a real tough job. Banks aren’t legally allowed to loan out money to a marijuana business since it’s a federal crime. So, you’ll have to look for private investors instead. Even so, some banks and credit unions have started providing merchant services and even some loans. Fortunately, various private and non-institutional investors have taken shown interest in this investment opportunity.
Finding a private investor for your medical marijuana business definitely not easy due to the fact that usually most of the investors are afraid that the cops will shut the industry down and thus these types of loans are considered high-risk. Due to a comparatively smaller number of investors, they may even want to cash it to their own advantage. Most private investors demand a percentage of the business along with the interest on the loans. Because of this, the business owner remains in debt for quite a while but overall, it eventually becomes very profitable in the long run.
Private investors were the only major backing to marijuana businesses in the absence of bank loans have taken up this opportunity. These include venture capital and private equity funds, angel investors (wealthy individuals, generally), marijuana business consulting firms that manage private funds, and private providers of high-interest loans. Any medical marijuana business who seeks a loan from one of these investors must make sure they:
- Are incorporated
- Have a business banking account
- Have a dispensary or grow operation in business for at least six months
- Have a specific amount of gross sales
- Have a good credit score
So any owners of medical marijuana businesses should ensure that they meet the mentioned conditions in order to get their business funded by private investors. Securing a financing for this business may be very difficult but the rewards it comes with are great. The laws and regulations regarding the marijuana business are always constantly changing. Be sure to consult an attorney to get all the updates on these laws and regulations in your jurisdiction. These obstacles for financing medical marijuana business are bound to diminish with time as this industry matures.
To get your medical marijuana venture organized and increase your chances of funding check out this business plan template. Medical Marijuana Dispensary Business Plan Template