Crowdfunding could be the answer for hopeful cannabis entrepreneurs

Published Aug 14, 2020 09:00 a.m. ET
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You are a cannabis entrepreneur, and for your dreams to become a reality, like many, you need capital. Living in the states makes this a problematic situation, partially due to commercial banks not giving money for cannabis businesses. Perhaps, could the answer be crowdfunding? It seems that Canada might have the best of both banking and crowdfunding.

Help thy neighbour

If your dreams are held back simply due to money, why not do what a couple in Egremont has proposed. The opening of a cannabis store costs in the region of $1 million. The couple looked at the benefits of asking 100 people in their community to invest 1000 dollars each. That would give the couple 100,000 dollars. The term used for this action is crowdfunding. With the help of a platform used for assisting cannabis businesses to fund their endeavours, banking is no longer the only legal option for funding.

A couple of the most well-known crowdfunding sites

  1. Fundanna

Fundanna, a company based in Chicago, has established investors for the cannabis business around the world. Here is the business to choose if you are looking for a relatively risk-free and easy way to invest in recreational or medical cannabis. This new platform formed in 2017, and it could be of assistance to you, but it isn’t free to access.

  1. Microventures

Bill Clark founded MicroVentures, which offers investments in companies’ in the early stages. The company connects accredited investors with cannabis start-ups. Head offices are located in Austin, Texas.

  1. CannaFundr

This platform was launched in 2014. The equity crowdfunding platform connects anonymous investors with cannabis-related ventures. There is no fee to join this hard to navigate the site, but approval may take some time, so it might take a bit for you to gain access after applying.

  1. Go Fund Me

Millions of people trust this platform to fulfill their dreams financially, as a leader of online fundraising. Ten years of experience has produced this respected platform, and cannabis entrepreneurs have seen the benefits that this form of a crowdfunding campaign can provide in the form of substantial monetary results.

Canada launched its first cannabis crowdfunding campaign with assistance from Green Mountain Health Alliance and FrontFundr. The investment crowdfunding platform ensures all Canadians can join in the cannabis economy space.

Why the difficulty?

Trying to raise capital for anything with a cannabis label will take you down a problematic green path to success. Interestingly, however, recreational cannabis sales are legal in 11 states and the District of Columbia. While cannabis remains on a schedule 1 narcotic list at a federal level, it is lumped category-wise along with LSD, heroin, and hallucinogenic mushrooms.

This position taken by the federal government puts banks who conduct business with cannabis businesses in a violation of federal law. Canada has passed the illegal status of cannabis and banking, and now the Bank of Montreal has since 2015 been responsible for overseeing more than a dozen cannabis companies.

Ending thoughts

Perhaps crowdfunding and the many platforms available in this business is the better way for the cannabis entrepreneur to conduct business.  For the small craft-type industry, which is now becoming more popular, the crowdfunding campaign strategy may become visible in more cannabis business plans going forward.

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