In the marijuana industry, six months can make a world of difference.
That’s definitely the case when it comes to the funding climate, which has improved significantly since the start of the year.
Entrepreneurs seeking startup financing and current medical cannabis business owners looking for cash to expand have several new options, including a $250 million fund offering loans and lines of credit to dispensaries and related businesses. The industry’s only angel investment network is hitting its stride – helping to create millions of dollars in funding deals – while the first crowdfunding site dedicated to marijuana businesses is set to launch soon. And some of the larger companies in the industry are investing substantial sums in businesses as well, highlighted by a $1.5 million investment in Kanna Life Sciences by Medical Marijuana Inc. and CannaVest.
Last week, cannabis entrepreneurs got more good news: A group headed by the founder and CEO of WeedMaps – one of the most well-known brands in the medical marijuana space – is raising money for a new venture capital fund that will make investments in ancillary cannabis companies. The group’s goal is to raise between $10 million and $25 million, which will be used to invest in startup companies and potentially even acquire marijuana businesses. What’s particularly interesting is that the group will provide some fledgling firms with hands-on guidance and perhaps even office space, similar to the benefits offered by a business incubator.
Of the many challenges marijuana entrepreneurs and current cannabusiness owners face, funding often ranks at the top of the list. The traditional sources of startup or expansion capital – bank loans, venture capital, etc. – are difficult if not impossible to come by in the cannabis industry given the huge risks, volatility, legal issues and overall newness of the business.
Fortunately, that is beginning to change.
Combined, these new investment initiatives could lead to several hundred million dollars in funding deals this year. While that’s small potatoes for most industries, it’s an impressive amount for the cannabis business. You gotta start somewhere, and this is a good foundation to build upon.
Also last week, New York and Nevada made big gains on the medical marijuana front – at the same time, no less. In New York, a measure to legalize medical marijuana sailed through the Assembly, while a bill in Nevada that would authorize dispensaries cleared the legislature and now awaits the governor’s signature.
Don’t break out the champagne just yet: There are still hurdles ahead for both measures, particularly in New York. But last week’s progress raises hopes that several new MMJ markets will crop up in the near future.
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