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Who Funds Cannabis in the US?

For most companies, raising enough funds to start their business is a major hurdle. Despite the $5 billion of legal cannabis sales in 2015, cannabis merchants still struggle to find legitimate funders and investors for their businesses. Despite recent promises by the United States government not to prosecute legal marijuana transactions, most financial institutions are still hesitant to work with them. So who is investing in the U.S. cannabis industry?

Even though the cannabis industry grosses billions every year, there are only a few major investors willing to back the industry. One reason for this is that institutional investors are often barred by policy or law from investing in industries that are classified as illegal by the federal government. Recently, Microsoft became the first major company to throw their hat into the cannabis ring. Backing like this would be critical to a cannabis startup, as it can take an average of $1 million just to open the doors.

Currently, companies who do invest in marijuana have the possibility to make huge profits once the laws change and allow bigger players into the game. Rob Hunt of Tuatara Capital has a private equity firm that is one of the largest investors in the industry. He began selling cannabis in 2007, sold his company and then joined forces with three Wall Street investors to help him capitalize on the industry’s need for funding. Tuatara will be prepared to sell its shares for large profits once bigger players are allowed entry.

Cannabis investors tell merchants who are looking for investors to focus on the management of their brand, and to know the laws particular to their state. In some states, residency is required but loans can be offered regardless of residency, which owners love because they keep control of the company. The lack of commercial credit means great opportunity for private lenders to step into the industry. This means that merchants will have more opportunities to get loans if they seek out private investors or lenders that specialize in cannabis and other high risk industries.

First American Merchant is a veteran merchant cash advance organization that helps businesses in the cannabis industry achieve success. Our acclaimed loan program has a simple application process designed to get you critical Marijuana business funding in less than 72 hours. Applicants need not supply any tax returns or financials.