A New Hope For Raising Cannabis Capital
Fundraising is a slog taking much more time, energy, and attention than most imagine
Raising capital is hard. It’s even harder in the cannabis industry. With marijuana unequivocally illegal under the federal Controlled Substances Act, and industrial hemp derivatives improperly painted as being unlawful due to the present lack of direct FDA oversight, investors can be wary. This has virtually eliminated the access of U.S.-based cannabis industry businesses to institutional capital; to mainstream public markets; and/or to mainstream business investment and acquisition.
To some extent the SAFE Banking Act solves this issue by expressly allowing for cannabis companies to bank cannabis revenues. Further, the SAFE Banking can open the door for large-scale institutional banks to evaluate the process for underwriting and servicing publicly-traded cannabis companies on the NASDAQ and NYSE.
The challenges that cannabis businesses have faced when it comes to raising capital has led the industry to seek, and to attract, a very specific kind of investor. This includes family offices, high-risk/controversial industry participants (i.e., alcohol, tobacco, pornography, etc.), wealthy individuals, foreign investors, private equity funds, SPACs, and/or venture capital.
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