Cannabis Business Readiness Guide: 3. Financing

At this time, most of the traditional business financing mechanisms such as banks and Small Business Administration loans are unavailable to the cannabis industry. This is largely due the US Drug Enforcement Agency classifying cannabis as a Schedule I Narcotic, which means that any bank or credit union whose deposits are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) cannot service the industry without risking their charter.

• This makes typical business operations such as completing employee payroll, hiring local service providers, signing a lease, and paying taxes extremely difficult. Additionally, operating a cash-only business creates serious safety and security concerns.

Recently a number of large private equity firms and Angel Investing Organizations have begun investing in cannabis businesses. Additionally, in early 2019, the North Bay Credit Union started offering banking services to local cannabis businesses.

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• Read next: 4. State Licensing