Medical marijuana is now legal in Pennsylvania, which is an excellent thing for the many patients who can benefit from the substance. However, even though medical marijuana is legal, it isn’t easy to start a business in the emerging pot industry. This is particularly true when it comes to obtaining funding.
While it is important for an interested individual to do detailed research before getting involved in the Pennsylvania medical marijuana business, we have put together some basic information about how a marijuana business could obtain funding.
Is Funding for Marijuana Business All the Same?
It is important to realize that being in the medical marijuana business doesn’t look the same for a grower as it does for a processor or a dispenser. Each of these occupations has different start-up costs so that obtaining funding may look a little different.
The fees are significantly higher for someone who is interested in growing. Someone who wants to grow will need to pay a $200,000 registration fee plus have over $2,000,000 in capital.
Someone who plans to operate a dispensary may be able to get started for less than $100,000, plus $150,000 capital on hand. The difference is enormous.
Common Hurdles in Obtaining Funding for a Marijuana Business
In addition to the need for start-up costs that are consistent with any new start up, there is one hurdle which is unique to the medical marijuana business. Since marijuana is still illegal under federal law, and banks are federally insured, it may not be possible for an individual to obtain lending from traditional means. This leave possible entrepreneurs in a difficult position.
What are Some Ways to Obtain Funding for a Marijuana Business?
When starting up a medical marijuana dispensary or becoming a grower in Pennsylvania, coming up with the capital is a challenge. We have put together a few funding ideas that you may want to look at since traditional bank loans might not be an option.
- Crowdfunding: Getting complete strangers to fund your project, i.e., crowdfunding, is a very real option. Websites like Kickstarter (or similar sites) can allow a potential business owner to raise real money, quickly. The owner can offer rewards to people who helped to fund the business. It can be a win-win situation for everyone involved.
- Working a second job or earning money on the side: Some people want to make the money themselves. With the cost to open a dispensary in reach for some individuals, it may just take a little hard work. Picking up some extra income is always an option.
- Look for investors: Taking in additional investors could be a possible way to get a business up and running quickly. With the medical marijuana business being new to Pennsylvania, there could be eager investors. There are cannabis-focused investor groups that may be willing to give you money if you have a solid business plan in place.
- Family and friends: If your family and friends believe in what you are doing, you may be able to obtain a personal loan from someone close to you. It doesn’t hurt to ask around!
- Incentives: It may be that as time goes by that the state of Pennsylvania will create incentives to open and operate clean, responsible medical marijuana businesses. Monitoring the information published by the state will keep interested individuals up to date with relevant information on the topic. Also, you can sign up for email from Legally Rooted to keep informed.
If you have further questions about the marijuana business in Pennsylvania, reach out to us at Legally Rooted. We can provide assistance to legal medical marijuana businesses in Pennsylvania.