Problems - Bits of Life

Banking options for the cannabis industry are few and far between. Even though the cannabis market is growing extensively, finding investors to grow your business remains a major problem.

Access to traditional capital is extremely limited if not fully absent. Currently, companies are facing a general blockade from financial institutions such as banks, Visa and Mastercard.

Obtaining conventional funding through mechanisms like small business loans is simply not an option due to the legal regulations surrounding cannabis. Because cannabis is still illegal in most countries, getting financing through a small business loan is nearly impossible, as financial institutions cannot legally handle capital that is connected to the plant. Bank services are in fact extremely limited such as in Spain where cannabis companies can’t rely on payments made by credit cards.

In the absence of traditional banking, cannabis distributors, manufacturers, cultivators and dispensaries scramble for solutions to conduct general business. Some businesses, like in the US, operate primarily in cash to pay staff, rent, equipment and taxes. This is a primary impediment to business owners in the cannabis industry.Some companies turn to private investors and venture capital instead. Unfortunately, options of finances from the private sectors in the form of shareholdings is also extremely limited. A huge number of countries such as China, Israel or Saudi Arabia prohibit their local investors to hold shares in cannabis companies. Furthermore, purchasing shares in the cannabis industry usually comes with a great expense between lawyers and taxes on registration. This aspect can easily scare off private investors from wanting to invest in the industry at all.