Crowdfunding For Cannabis: Alternatives To Conventional Loans

//Crowdfunding For Cannabis: Alternatives To Conventional Loans

Crowdfunding For Cannabis: Alternatives To Conventional Loans

Crowdfunding For Cannabis

Cannabis companies can have serious problems raising funds. Although cannabis is a fast-growing sector with plenty of demand, federal laws still prohibit it. That makes it hard to secure financial capital. Regular business loans aren’t always feasible for these businesses. That’s where crowdfunding comes in.

It is both a great opportunity for investors and for the businesses they support.

Crowdfunding For Cannabis In A Nutshell

Crowdfunding is a means for startups and established businesses to raise money from directly from individuals. The people who invest generally receive rewards or even a stake in the company itself.

This may be done through a platform (we talk about some below), through an attorney or accountant who advises you, or directly. It’s always a good idea to have a professional look over any investments you’re thinking of diving into.

Crowdfunding For Cannabis: Problems With Conventional Loans

The US federal government still considers marijuana a Schedule I drug. Because of this, all banks lending to cannabis-related businesses risk prosecution. It’s pretty understandable why they shy away from the industry.

Is There Risk In Crowdfunding For Cannabis?

It’s legal to give almost $2,000 to cannabis companies in return for a percentage of ownership. There is, of course, risk that the business may not succeed. In that way, becoming a cannabis angel investor is as risky as doing so in any industry. However, you don’t face any specific risks just because of cannabis’ tricky status.

Crowdfunding For Cannabis – Platforms

Fundanna, CannaFundr, and 420 Fund Me are popular crowdfunding platforms that specialize in cannabis. They work similarly.

Potential investors join the network and can search or receive updates about campaigns they can donate to. Each campaign could have its own terms and conditions and should be treated as separate entities. Furthermore, each platform has a different role in terms of how they see their responsibility to investors.

Ultimately, it is up to you to investigate all of your investments. Again, we advise you involve a professional to review the terms and give their opinion on the project, start-up or campaign’s viability.

While CannaFunder and Fundanna are pretty similar, 420fundme is a bit different. This platform is rewards based. Therefore, users ‘gift’ funds to people looking for help getting their business off the ground.

Two other peer-to-peer investor platforms deserve a mention: Cannavstr and 420shindig. These websites enable companies to throw cannabis fundraising parties.

Crowdfunding For Cannabis: Challenges And Concerns

The authorized grey area where the cannabis business operates indicates that things will not actually be easy for businesses looking for legitimate capital.

Something as easy as opening a small business checking account could prove challenging. Banks are just too skeptical to greenlight marijuana businesses.

Furthermore, it is tough for average individuals to commit. Therefore, websites that require sign up to browse may turn off potential investors. After all, we all relate to an email inbox flooded with updates from things we signed up for and never stuck with.

Additionally, platforms experience bank troubles as well. For example, 420fundme was unable to operate for a period of time as a result of its own bank backing out of their association.

If you’re interested in any of these platforms, remember to do your research and read all terms and conditions before investing. If everything feels right to you, become an angel investor for a budding bud business!

By | 2018-10-07T20:16:29+00:00 October 7th, 2018|Canna Business|0 Comments