Marijuana Business Factbook 2019

273 © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. Chapter 7 Cannabis Business Funding & Investing Historically, marijuana entrepreneurs have been limited in their ability to raise funds to start a business by the industry’s continued federal illegality, which rendered them unable to secure loans from banks or apply for business development grants that are available to mainstream companies. This led business owners to fund themselves through personal savings, home equity loans, credit cards and loans from friends and family. Although significant progress has not been made on the industry’s ability to work with financial institutions, the stigma surrounding cannabis continues to erode. More states have legalized medical and recreational use, and familiar mainstream companies are entering the space. This has brought major investors to the table ― including Big Alcohol, with Constellation Brands’ investment in Canopy Growth, and Big Tobacco, with Altria’s investment in Cronos Group. Marijuana investment activity reached new highs in 2019, and continued expansion is expected as U.S. companies grow their domestic footprint and Canadian companies work to reach all corners of the globe. Although big money is on the table now, smaller companies may struggle to find funding to launch ― while startup and operating costs climb. Investors increasingly are seeking equity in exchange for their investment, rather than offering high-interest loans.