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Starting your Cannabis Business

Cannabis Industry Startup

Our premier CPA firm provides expertise in a wide range of areas within the cannabis industry. We can help you make sure your cannabis business is set up to succeed from the get-go.

Advice & Consultation

We can provide consultation and advice in a variety of subjects:

  • Regulatory Compliance Solutions
  • Risk & Compliance Assessment & Analytical Services
  • Digital Risk & Compliance Assistance
  • Information Security Advice
  • HIPPA Compliant Business Solutions
  • Trust & Transparency
  • Internal Audit, Compliance & Risk Management Solutions
  • Financial Systems Design
  • Finance Effectiveness
  • Cash & Inventory Management
  • Business Process Reengineering
  • Internal Audit Solutions
  • Supply Chain Management
  • Strategic Planning
  • Operational & Performance Assessments & Improvement Services
  • Fraud Risk Assessments
  • Training
  • IT Assessments & Requirements Analysis
  • Cybersecurity & Privacy
  • IT Strategy
  • Cloud Strategy
  • Systems Selection & Implementation
  • Change Management
  • Digital Transformation
  • IT Assessments & Requirements Analysis
  • Cybersecurity & Privacy
  • IT Strategy
  • Cloud Strategy
  • Systems Selection & Implementation
  • Change Management
  • Digital Transformation

Business Structuring

We can help:

  • Calculate the start-up costs and provide a 3-year projected income statement for emerging marijuana businesses
  • Provide application support assistance which includes:
      • Application project management support
      • Application writing
      • Applicant bio writing
      • Compose standard operating procedures that adhere to local and state laws
      • Write operating plans
      • Write inventory control plans
      • Write noxious odor control plans
      • Write risk mitigation plans
      • Write security plans
      • Research local & state marijuana laws (Supported states include California, Florida, Ohio, Washington, Oregon, and Michigan)

Securing Capital

Attract the right funds and additional partners for your business is vital. Investors may be intrigued by the cannabis industry, but its newness may create a level of risk that turns away funders. In addition, cannabis businesses are a bit more capital intensive than most, with estimations of  $50,000-$65,000 in start-up expenses.

Broadly speaking, there are two ways to get capital for a new business: debt and equity.

  • Debt
    • This requires taking out a loan that you have to repay over time (usually with some interest).
    • Debt lenders have a fairly straightforward application process requiring items such as a credit score, character, capacity to repay, cash flow and collateral.
  • Equity
    • By offering equity, you’re selling a piece of the company and trading a degree of ownership for cash.
    • Investors often ask for a formal pitch and want to understand your leadership team, product details, market size, and competition.
    • If you show that you’ve gone through your state’s proper licensing and permit procedures, while maintaining immaculate records, your chances of working with an equity investor will increase.

Though there aren’t many traditional funding sources open to a cannabis business, crowdfunding is still an option. The SEC allows anyone to invest $2,000 in small businesses in exchange for a stake. Companies can raise up to $1 million through crowdfunding sources. Check out Fundanna, CannaFundr, and 420fundme.

Traditional banks often can’t offer your cannabis business a loan, but there are other investors who will invest if you can show a solid ROI (return on investment). These general rules will help your chances:

  • In operation for at least six months
  • Incorporate as an LLC, limited company or S corporation
  • Have a personal credit score of at least 500
  • No criminal record
  • Pass a background check
  • Gross monthly sales of at least $10,000 (alternately, if you’re a start-up, be able to demonstrate how your business will be able to have a certain level of monthly sales)
  • Have a business plan
  • Have a business bank account

Look for venture capital funds that are familiar with the industry. Research Privateer Holdings, which has raised more than $100M to fund legal marijuana businesses. Others include Tuatara Capital, MedMen Capital, and Snoop Dogg’s Casa Verde.

Online loan companies have an easier time lending than traditional banks. Do some research to see if an online loan company can legally extend a loan to a cannabis company (as regulations will vary by state). Online loans often have an easier application process, lower interest rates, and higher approval rates.

When a cannabis company can’t get funding, some entrepreneurs take out loans through a different, non-cannabis business and then use those funds in a sub-loan to their cannabis business, when regulations allow.

 

GreenGrowth CPAs can help you navigate the rules and regulations around securing capital for your canna-business.

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States We Serve

Arizona
California
Colorado
Illinois
Massachusetts
Michigan

Montana
New York
Oklahoma
Oregon
Pennsylvania
Washington

Offices

Downtown Los Angeles
2408 S. Broadway
Los Angeles, CA 90007

Oklahoma City
1120 Northwest 51st Street
Oklahoma City, OK 73118

Get in Touch Today

800-674-9050

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The information contained in this website is meant only for guidance purposes and not as professional legal or tax advice. Further, it does not give personalized legal, tax, investment or any business advice in general. For professional consultation, please sign-up for our services. GreenGrowth CPAs disclaims any and all liability and responsibility for any and all errors or omissions for the content contained on this site. Please review our privacy policy here.