Since the inception of the medical and recreational marijuana industries, individual companies have been in extremely difficult if not impossible situations when looking to fund their businesses. Why is this you might ask? Well, because of marijuana’s federal status, big banks cannot give out loans given their federal funding. This has created a large need in the industry and only now are options arising.
Well some marijuana entrepreneurs can fund their businesses with their own savings, many find themselves in a tough position without the ability to receive outside funding.
In recent times financing has become easier for these businesses to find according to Scott Jordan who is a big player in the industry.Jordan works as the director of business development for Colorado-based Dynamic Alternative Finance. The firm has helped to facilitate over $27 million in loans for marijuana related businesses over the course of two years with a network of investors at their hand.
In addition, there are several banks, which are admittedly small, that will provide loans and funding to cannabis related businesses. Within the state of Colorado there are more than eight banks including a credit union that are taking deposits and giving loans to these companies.
Jordan stated that in the application process for credit, companies “are focused on what I call the five C’s: credit score, character, capacity to repay, cash flow and collateral. With these, banks can determine whether or not and how much they are willing to give. The firm that Jordan helps to run helps to find funding to help expand various cannabis businesses that need help in areas of running their company. Whether that be buying new machinery or real estate to develop, these companies need the help.
In the emerging market of cannabis, investments are short and much needed. As time passes, more legitimacy will help to shape the future of cannabis investing and banking.