Canna Business 101: Funding Types and Sources
Unlike more mature industries, cannabis ventures are predominantly "startups" differently situated in evaluating whether to seek debt or equity financing. While debt, (i.e., loans secured by assets), is preferable, equity, or convertible debt, is more common.
Because it is 100 percent violative of federal law, it is almost impossible for "plant touching" marijuana businesses to obtain a loan from a federally charted bank or credit union. Specifically, because the Comprehensive Drug Abuse Prevention and Control Act, 21 U.S.C. Section 801, Et. Seq (1970), prohibits the "manufacture, distribution, and dispensation" of cannabis. And any transfer or deposit of monies yielded from cannabis sales may be deemed "money laundering" in violation of the Currency and Foreign Transactions Reporting Act, 31 U.S.C. Section 5311-5330, most banks and credit unions refuse to provide marijuana growers, processors or dispensers with financial services.