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.