If there was anything that investors learned from the Marijuana Investor Summit held at Denver, Colorado last April, it was that being in the marijuana business right now is a tedious uphill climb. Only 23 states and the District of Columbia have legalized medical marijuana, while only Colorado, Alaska, Oregon, and Washington have legalized recreational pot. With cannabis still considered illegal on the federal level, the chaotic and conflicting rules are taking a toll on pot entrepreneurs.
Dooma Wendschuh, co-founder of marijuana company ebbu, illustrated the risks during the ‘Raising Funds’ panel, which was one of the most popular talks during the summit. He said, “When we want to raise capital, I go up to someone and say, ‘Would you like to invest in my company? Here’s how it will work. One: You may go to prison for making this investment. Two: I may go to prison, and you might lose all your money. Three: our minimum investment is $250,000. Sure you want to play ball?'”
Other speakers also emphasized the risks, citing it as “normal” for a relatively new and controversial industry. Take Jamie Perino, owner of the three Euflora dispensaries. When she opened her first store, her bank not only closed all of her accounts, but also cancelled all of her credit cards. Though there were banks willing to support cannabis firms, they charge outrageous fees amounting up to $10,000 a month due to lack of banking reforms.
“No other industry has to pay fees like that,” she said. “You’d better have a temperament that handles stress well.”
Still, all these risks did not deter investors from cashing in on the trend. At the end of the conference, Wendschuh left with 25 leads from accredited investors and one commitment. After all, the cannabis industry has a serious chance of booming once all the dust has settled.
“Now is the time to get into the space,” said David Friedman, owner of Marijuana Investor News. “As soon as pot is federally legal, and can be transported across state lines, the big companies with deep pockets—tobacco and alcohol—will take over. We’re all positioning ourselves to be bought up.”
What are the other risks and rewards of being in the marijuana industry? Voice your opinions in the comments section below – your opinion matters to the nation.