Marijuana is legal in several states but illegal on a federal level. So, on top of the typical problems faced by every retail-related business, marijuana businesses must clear additional financial hurdles stemming from their products’ legal status.
Many marijuana businesses are unable to open bank accounts and therefore deal mostly in cash. This requires high-tech security systems, like 24/7 video surveillance, reinforced doors and windows. Armored trucks are needed to transport hundreds of thousands in cash on a regular basis.
Businesses that do have accounts with credit unions pay a massive price. There’s an upfront fee of approximately $10,000 to cover financial audits and background checks. Some credit unions also charge at least $5,000 a month for ongoing due diligence and reporting mandated by FinCEN. And since the Internal Revenue Service (IRS) does not permit deductions for businesses involved with illegal substances, marijuana businesses must pay twice or even three times as much in taxes compared to a conventional retailer.
With so few lending sources available, a marijuana business could easily make the mistake of financing significant business expenses with a credit card. In certain areas, the only alternative is risking the loss of your home with a home equity line of credit.
Fundture Capital has experience in providing Small Business Loans for Marijuana Dispensaries & Businesses. We can provide all types of business lending products. Contact us today for your FREE business funding consultation!