How to find capital to start a marijuana business when it is still not legalized in all states of USA
To start a business everyone needs a particular amount of capital to make its debut in the market. For the money, we mostly apply for the loans and take help from the banks but not in this case. Many of you out there are keen to start a marijuana business but the real problem is that where to get the money for it.
We know that the medical and recreational marijuana is not legal in all states of USA. Therefore, banks are not taking the risk to provide loan for this business and go against the Federal Law because of the Federal Deposit Insurance Corporation.
Still, if you are determined to start this business here are a few resources from where you can get the required capital.
Private investment firms
In the absence of the bank loans, the private companies have taken this golden chance of backing up the marijuana business. You will be able to get the venture capital, private equity funds, and marijuana business consultant firms, as they will manage your private funds with high-interest loans.
The marijuana business loans are regarded as the high-risk ventures and to get the loan you have to be:
• You must have a business banking account
• You must be a part of marijuana dispensary or a marijuana growing operation that has been doing the business for at least 6 months
• Your monthly gross sale should be minimum $10,000
• You credit scores must be 500 or more
You might find other private investing companies that will temporarily invest in your business. The private companies in return of the capital they have provided you will take the ownership stake but you will have the complete working control over the business.
In case you are not able to meet the requirements of the private equity, you can still find a wealthy investor. As the marijuana business is growing, many people are looking forward to investing in this business. Therefore, you can contact a private investor, fulfill the terms, and condition to get the capital you want to start your business.
Finding a private investor can be a tough job because you have to assure them that you will not drown their money and for safe keeping, you might have to give them the legal documents of either your car or a real estate property that you own.
It is the last option left if you are not able to get the capital from any other resource. In the case of self-financing, you might not get the effective amount but still you will make enough to start the business. For this, you have to sell your expensive assets and use your savings to start the business. Therefore, it is not a very attractive option but in the end, something is better than nothing is.
As this industry is maturing and the laws are, changing soon the obstacles in finding the capital for marijuana business will be resolved. If you want to explore more about this topic or anything else related to marijuana, feel free to check out my book at Amazon named as “Breaking Bud”.