co·nun·drum noun meaning: a confusing and difficult problem or question.

As with any start-up company, capital is crucial to growth. But unlike other businesses, marijuana companies deal with a federally illegal substance.  This leads to one of the biggest issues that businesses involved in the cannabis industry face today – limited access to capital.  Earlier this year, the Obama administration attempted to address the concerns of US banks about lending money to legalized marijuana businesses by offering to provide guidelines on how to navigate these state-legal-yet-federally-illegal business transactions.  Unfortunately, the guidelines have not been sufficient to sway bankers into opening the vault doors and providing loans to these types of organizations.

Don Childears, CEO and president of the Colorado Bankers Association, wrote an editorial for the Denver Post.  In his essay he stated, “[guidance] cannot change the fact that marijuana is against federal law.  It cannot change water into wine.” The bottom line is that banks are monitored by regulatory agencies and these guidelines do not shelter bankers from prosecution or other sanctions which could include fines, cease and desist orders, and/or professional bans.

The lack of accessible funds has pushed marijuana entrepreneurs to become creative in their quest for capital.  Recently, the Two Rivers Water & Farming Company (OTC:TURV), announced an agreement in which it will sell and then lease back property in its own portfolio. (  TURV takes advantage of the arbitrage opportunity for water rights in Colorado near the Colorado Arkansas River Basin.  The core business is to acquire irrigated farmland that contains senior water rights and convert this land from feed crops to fruit and vegetable crops. TURV recently began a new division called GrowCo which seeks to provide greenhouses, equipment, and water for the legal marijuana industry.  The sale and lease back business transaction will allow the company to obtain capital to fund its upcoming greenhouse projects while still being able to use the land for farming all without risk of diluting the company’s stock.

Another creative venture is the marijuana business financial cooperative which was enacted roughly four months ago in Colorado.  Unfortunately, the program has not had any applicants.  It requires any business seeking to start one of these co-ops to obtain permission from the Federal Reserve.  As one insider stated, “It’s a very small game of chicken right now, with neither side wanting to commit too much without having a sense of how it will play out.” (

In the effort to provide entrepreneurs the capital necessary for expanding operations, the private sector is stepping up to bridge the gap.  Chuma Holdings, Inc.(OTC:CHUM), formerly CannaMed Corp., provides financing and financial aid to collectives, dispensaries, producers, and product businesses through alternative funding and financing solutions specifically targeted to the emerging cannabis industry.  CHUM goes well beyond the services normally provided by the banking system to help the companies they are investing in become more efficient and achieve higher success.  CHUM provides lines of credit, property financing, commercial loans, and convertible notes, as well as, regular banking and payment processing solutions.  In addition, they offer services that help ensure compliance with state regulations, consulting for commercial build out and equipment, turnkey operations including human resource issues such as payroll and workmen compensation, help with supply chain monitoring, research and development, and other services such as branding, marketing, and increasing sales.

Combined, the management team of CHUM has over thirty-two years of successfully navigating the legalized cannabis industry in California and has helped over 500 dispensaries and production facilities.  CHUM has designed a lending platform termed the Chuma Compliance Index (CCI) – a 120 point scoring system that determines if a company is eligible for financial assistance.  This system combined with the experience and expertise of management allows the company to mitigate financial risk and maximize returns.

CHUM will continue to target California which currently has the largest state-market in the US; surpassing both Colorado and Washington which have recently legalized recreational use for adults.  Plans to expand into other state-markets are in the works as CHUM seeks to raise $10 million through private placement that will be used to broaden its customer base and improve its core business. This is a more traditional approach to raising capital, which will in turn create a source of alternative funding to other businesses in the cannabis industry.

Overall, one could argue that the inability to secure capital through traditional means may have proven to be a blessing in disguise.  Banks are in the business of making money.  Even if a business goes bankrupt, banks that made loans to those companies are generally repaid the principal.  Banks do not seek out ways to help businesses thrive, they simply collect payments.  One does not have to look far in our history to see how the greed of bankers drove the housing market into collapse giving loans on top of loans for home values that did not have a material backing.  One can only ponder the potential negative consequences the cannabis industry may have had to face if banks were getting involved.  It is with the entrepreneurial spirit that marijuana will find a way to flourish in the country.  So for now, the US banking industry can sit on the sidelines and salivate over the potential profits this booming multi-billion dollar industry is preparing to provide to those with the ability to see just how green the future is going to be.

MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 |
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