Find funding for your cannabis business on this no-fee crowdfunding platform, but with some drawbacks.
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Nationwide legalization of marijuana sounds more likely each year. But that it’s legal in only a few states means loans from big banks are generally a no-go for the time being.
Funding for your cannabis business is getting easier, however. It used to be that entrepreneurs had to fly to conferences to meet investors. But now you can find financing for your cannabis business online.
We take a look at CannaFundr, a crowdfunding site designed to help you find financing for your marijuana-related business.
What is CannaFundr?
CannaFundr is a cannabis crowdfunding and investment platform launched by Crowdfund Connect to entrepreneurs get the money they need to grow their business — and possibly their product.
After your business’s profile is approved by CannaFundr, investors contribute to your investment fund. It’s an equity-based platform, meaning that investors get a percentage of ownership in exchange for money. It’s also modeled on social media sites to make it as easy as possible for investors to find, explore and ultimately give money to your business.
What types of businesses does CannaFundr service?
CannaFundr is designed to fund a variety of cannabis-related businesses in the US. Growers and dispensaries can get funding on the site, but they won’t have as easy a time as companies that manufacture cannabis products.
This is because growers and dispensaries are considered more risky businesses from a legal standpoint. If you want to fund your growhouse or dispensary, you may want to take a look at other financing options like angel investors instead.
- Product name: CannaFundr
- Fees: None
- Permitted uses: Business expenses
- Eligibility criteria: Must be in a US state where marijuana is legal
- Required documents: Business plan, investment pitch deck
- Legal states or regions: States where marijuana is legal
Do I qualify?
To apply for funding with CannaFundr, your business must deal with cannabis and base its services in a state where marijuana is legal. Other than that, you’ll face no qualification requirements to apply.
But given the murky laws and legality of running a cannabis business, CannaFundr’s review process is rigorous. And you’re only approved if investors are interested.
To increase your chance for approval, make sure you have a solid business plan, investment pitch deck and lots of visuals. It could be worth hiring a marketing consultant.
What does CannaFundr do well?
- It’s easy to use for investors. CannaFundr is designed to make it as easy as possible for investors to find cannabis-related businesses to fund.
- No signup fees. Setting up a CannaFundr profile is free.
- Lots of multimedia options. You can upload videos, images, documents — almost any kind of promotional material — to make your page as enticing as possible.
What to look out for
- Website is hard for businesses. The site’s set up with investors in mind, and it might be hard to find answer to your questions. Prepare to spend time figuring things out.
- It’s difficult to ask questions. You can’t call CannaFundr if you get confused — and you will — so setting up your profile could take some time.
- You can’t look at other projects. The social media aspect of this site applies to investors only. While keeping other projects secret might legally protect businesses, you won’t find a community of like-minded businesses here.
- You can’t follow up with investors who’ve viewed your project. CannaFundr cards are entirely in investors’ hands.
How do I apply to crowdfund on CannaFundr?
- Go to the CannaFundr homepage. Scroll to “Add your startup company to CannaFundr for free,” and click Get Started.
- Sign in using Facebook, LinkedIn or your email account.
- Enter your email address and create a password. Select “Entrepreneur,” enter your timezone, read the terms of service and click Continue.
- Complete your profile information and click Continue.
- CannaFundr should email verification to activate your account — just click the link.
- Sign in to your account and click +Apply for Funding.
- Create a company profile and click Create.
- Fill out your company information and post videos, pictures and documents to flesh out your profile.
- CannaFundr notifies you once approved, which is when you can start raising money.
What documents do I need to apply?
You’ll need to main business documents for success with CannaFundr:
- A business plan. Keep your complete document on hand for any investors, and use parts of your plan — like the executive summary, financial model and performance reports — to flesh things out.
- An investment pitch deck. Upload a short presentation to your profile to give investors a quick sketch of your business plan.
I’ve got an account on CannaFundr. Now what?
Once you’re approved, continue to update and tweak your profile while you wait for investors to contribute. And be sure to let customer service know if you bump into any problems.
Investing through CannaFundr
Investing in the cannabis industry is significantly easier than crowdfunding your business. It’s easy to join, you won’t pay a fee and you can invest as little as $2,500.
But not everybody can become a member. To join, you must be an accredited investor as defined by the US Securities and Exchange Commission. This means that, among other things, you must have a net worth of at least $1 million or earned more than $200,000 annually for the past two years.
Is marijuana legal in my state?
Marijuana regulations by state
Although many states have voted to legalize marijuana, the federal government still classifies it as a Schedule I drug. This makes getting a loan for your cannabis-based business a lot more complicated.
As of September 2017, marijuana is legal to some extent in 28 states and the District of Columbia.
|State||Possession limit||Plant limit||Recreational|
|Alaska||1 oz||3 mature, 3 immature||Yes|
|Arizona||2.5 oz||12 plants||No|
|Arkansas||3 oz per 14 days||N/A||No|
|California||8 oz||6 mature, 12 immature||Yes|
|Colorado||2 oz||3 mature, 3 immature||Yes|
|Hawaii||4 oz||7 plants||No|
|Illinois||2.5 oz per 14 days||N/A||No|
|Maine||2.5 oz||6 plants||Yes|
|Maryland||30-day supply, TBD||N/A||Yes|
|Massachusetts||60-day supply, 10 oz||N/A||No|
|Montana||1 oz||4 plants, 12 seedlings||No|
|Nevada||2.5 oz||12 plants||Yes|
|New Hampshire||2 oz per 10 days||N/A||No|
|New Jersey||2 oz||N/A||No|
|New York||30-day, nonsmokable||N/A||No|
|North Dakota||3 oz per 14 days||N/A||No|
|Ohio||90-day supply TBD||N/A||No|
|Oregon||24 oz||6 mature, 18 immature||No|
|Rhode Island||2.5 oz||12 plants||No|
|Vermont||2 oz||2 mature, 7 immature||No|
|Washington||8 oz||6 plants||Yes|
|Washington, DC||2 oz dried||N/A||Yes|
|West Virginia||30-day supply TBD||N/A||Yes|
CannaFundr makes financing for cannabis business a lot easier than in the past. But that doesn’t mean it’s easy. Lots of users complain that it’s hard to navigate — and we had the same trouble.
Look at your other options before choosing a financing platform for your cannabis business.