Cannabis and Hemp in Thailand

Are you an entrepreneur or business person looking to invest in the cannabis and hemp industry? If yes, Thailand might be your most probable destination. With numerous developments, regulations, and research, the Thai’s cannabis market is becoming a hit, not only in Asia but also globally,

Thailand is among the most promising nations in terms of cannabis trade and consumption. While other governments are still putting restrictions on cannabis and hemp, Thailand is exploiting this somewhat controversial industry. This article provides a complete overview of the cannabis and hemp industry in Thailand. Read on!

History of Cannabis and Hemp in Thailand

Cannabis, (popularly known as kancha) and hemp use have come a long way, from the traditional kitchen ingredient to the modern medicinal substance. Laborers used marijuana as a muscle relaxer while women used it to ease labor pains. However, the Cannabis Act, B.E. 2477 of 1935, criminalized the possession, use, or sale of cannabis.

What Does Thai’s Cannabis Look Like?

Thailand’s kancha is different from that from other parts of the world. It is a pure Sativa landrace highly popular for its high THC content and relatively low CBD. Its leaves grow in clusters and feature wispy hairs. Also, it has a citrus scent and produces a lighter “high” than other types of cannabis.

The majority of Thai’s cannabis varieties take around 20 weeks to flower due to lack of light variation and temperature between seasons.

In the modern-day, many people in Thailand regard cannabis as traditional medicine. Unlike other drugs, cannabis doesn’t experience a lot of stigmas. The government’s contribution to the legalization of kancha removes any significant war on it.

Cannabis and Hemp Regulations in Thailand

Thailand has laws in place that regulate the production and use of hemp and marijuana. Although the rules were more stringent in the past, the Thai government is easing them day by day.

To start with, the government has separate laws for hemp and cannabis. Hemp is legally distinct from cannabis as it contains less than 0.2% THC. In 2018, the government enacted its first regulations that allowed government entities and agencies to apply for hemp cultivation permits. The registered entities would grow hemp in any of the following provinces: Nan, Chiang Rai, Mae Hong Son, Tak, Phetchabun, or Chiang Mai. Hemp strains from these provinces are highly regarded for their high-quality fibers, making them suitable for the textile industry.

In December 2019, Thailand legalized the medicinal use of cannabis. Medicinal kancha can be used to treat the following;

  • Multiple sclerosis
  • Child epilepsy
  • Cancer

Recreational use, however, is a crime that attracts more than 15 years in prison.

In the new regulations, 99% pure hemp extracts containing a CBD to THC ratio of 0.01%:0.2% weight can be used in pharmaceutical drugs and herbal products. Dried hemp back, seeds, fibers, and stems can as well be used in food products, cosmetics, and traditional medicines.

In recent regulations, Thailand removed hemp extracts and low-level cannabis from the list of banned narcotics. Hemp seed and oil derivatives are allowed. CBD extracts from hemp plants and marijuana were also removed from the list of banned narcotic substances.

Currently, kancha is grown by government agencies and research institutions such as universities. They grow industrial-grade cannabis rather than the typical garden cannabis.

Production and Trade of Hemp and Cannabis in Thailand

Thailand highly restricts the growth, manufacturing, and trade of both hemp and kancha. It is illegal to grow cannabis at home whether for recreation or medicinal use. Also, the sale of cannabis seeds is illegal. This means that you cannot purchase them in Thailand or buy from another country.

With a government permit, a farmer can cultivate hemp. The law requires that hemp must not exceed more than 1% THC. Hemp can only be grown in designated areas, while seeds can exclusively be sourced from licensed hemp-harvesting producers.

With a valid license, the farmer can grow, harvest, or process hemp for;

  • Research
  • Commercial use
  • Production and distribution of seeds
  • Household use

Thai Cannabis Market Scope

The Thai cannabis and hemp industry is soaring very fast since the legalization of medicinal cannabis and hemp on medicinal and food products. According to the Bangkok Post, Thailand’s cannabis industry is estimated to hit around USD 661 million by 2024.

Thailand approved USD 4 million to expand marijuana farms for medicinal purposes. This will help fend off any foreign competition for medicinal marijuana.

The Future of the Hemp and Cannabis Industry in Thailand

Thailand is poised to overtake the United States’ Hemp and Cannabis Industry within the next 5- 10 years.

There are various proposals to legalize the cultivation of kancha. Thailand is gearing up towards full legalization of kancha that will allow Thais to cultivate up to 6 cannabis plants at home. This kancha will be sold to the government for conversion to medicinal marijuana.

It looks likely that farmers will be able to plant cannabis trees in their gardens. While this will have to wait, the government has built a very large industrial-scale, medical marijuana facility. The Government Pharmaceutical Organization (GPO) is hoping to cultivate plants that will produce enough ingredients for the manufacture of a million, 5ml kancha oil bottles by Feb 2020.

Future kancha strains will have differing percentages of CBD and THC. Maejo University, the premier cannabis research institution, has developed a marijuana strain called Issara. This strain offers equal percentages of CBD and THC. These strain will treat illnesses and symptoms that require different ratios.

January 13, 2020 / by / in
Global Cannabis Markets to Watch in 2020

The global cannabis industry is taking shape, with new markets emerging gradually. From North America to Europe and Asia, Cannabis is becoming a new raw market for investors and business people. The recent wake of legalizations is leading to the emergence of new markets for cannabis investors.

2020 will likely be another year of the boom in the cannabis industry. With investors willing to push resources in this business, opportunities seem to emerge on the horizon. The global cannabis and hemp market is expected to hit over $40.6 billion by 2024, and these markets are emerging as the ultimate hits;


After the legalization of both medicinal and recreational marijuana, Canada is becoming a force in the industry. Big companies are gaining positions in this promising market. In 2019, Deloitte estimated annual revenue of cannabis sales at around USD 22.6 billion. The firm also estimates demand to go above 600,000 kilograms per year.

As of July 2019, there were about 38 licensed producers who could grow, harvest, and process cannabis. In Canada, marijuana has been legalized on the federal level. This provides companies operating in the industry with greater safety and security.

Below are the top Canadian cannabis companies;

  • Canopy Growth
  • GW Pharmaceuticals
  • Curaleaf Holdings
  • Cronos Group
  • Aurora Cannabis
  • Green Thump Industries
  • Tilray Holdings
  • Aphria
  • Trulieve Cannabis
  • CannTrust Holdings

All these companies have massive investments in the Canadian cannabis industry. Also, they have the largest marijuana stocks in 2020.

United States

Unlike Canada, Cannabis is legal on state rather than the federal level. As of 2019, the District of Columbia and 33 states had legalized marijuana for either medicinal, recreational, or both purposes. Only 14 states have legalized the recreational use of cannabis. Demand for marijuana is on the rise, with an estimated $8 billion in revenue generated in 2019.

An estimated 38.4 million people consume cannabis, either legally or illegally. In 2020, the cannabis market is poised to grow by more than 25%. The total legal cannabis sales are expected to reach nearly $30 billion by 2025. According to research by Business Wire, 36% of cannabis consumers reported daily cannabis use while another 59% admitted consuming cannabis at least once a week.

Florida, North and South Dakotas, New Jersey, Missouri, and Arizona states are likely to step up in their campaign towards the legalization of marijuana.


Thailand is the first Asian country to legalize medicinal cannabis. It is fast growing in the cannabis industry after recent legalizations. In September 2019, Thailand lifted cannabis and hemp extracts from the list of banned narcotic substances. Thailand allows CBD extracts not exceeding 0.2% THC.

There is an ongoing proposed draft to allow Thais to grow a limited number of cannabis trees at home. Thailand’s cannabis industry is estimated to hit $661 million (around 21B bhat) by 2024. If exports are made legal, Thailand could be exporting approximately $20 billion by 2025.


In 2017, Germany legalized the use of medicinal marijuana. CBD oil, edibles, cosmetics, crystals, and capsules are allowed in German markets. However, THC levels are strictly controlled.

Germany allows imports exceeding 2,800 kilos of medicinal marijuana to meet local demand. In 2019, Germany’s Federal Institute for Drugs and Medical Devices (BfArM) issued licenses for domestic production of cannabis. The main aim of this licensing was to reduce the over-reliance of imports from Canada and the Netherlands.

In 2018, the German cannabis industry was valued €73.7 million. Cannabis patients are poised to exceed one million by 2024. By 2028, the cannabis market is estimated to reach €7.7 billion.

In 2020, around five cannabis companies could be listed in the European Stock Market. While stocked markets missed out in the early stages, German companies are looking to capitalize on the growth. By late 2020, German suppliers distributing various products will also multiply significantly.


In Italy, cannabis is legal for both industrial and medicinal uses. However, recreational use is decriminalized but highly regulated. Possession of small amounts of cannabis for personal use is a violation that’s subject to fines. Unlicensed cultivation of cannabis is illegal and subject to imprisonment.

Licensed cultivation of marijuana in Italy for industrial and medicinal purposes requires the use of licensed seeds. The Stabilimento Chimico Farmaceutico di Firenze (SCFF) is the only authorized grower of medicinal cannabis.

Although the cannabis market in Italy is meager, it’s expected to triple in 2020 from last year’s 200 kilograms. Despite these small quantities, Italy remains one of the largest European markets. Italy continues to legalize marijuana and might consider recreational use in the coming years.


Uruguay remains the pioneer country globally to legalize recreational marijuana. Also, it’s the first country to allow commercial trade of Marijuana.

In Uruguay, there are more than 7,163 home growers and over 36,487 marijuana customers. However, only two companies have licenses to grow high-THC medicinal marijuana.

Investors are betting on Uruguay to become a global export hub for medicinal marijuana. According to the Medicinal Union of Uruguay, investment in the cannabis market has surpassed USD 100 million. However, this investment is not enough to satisfy the current demand.

According to Monitor Cannabis, Uruguay’s cannabis market could exceed USD 85 million annually if the market is fully expanded.

The Bottom Line

Above are some of the most promising cannabis markets globally. For investors looking to put their resources in the cannabis industry, these are among the most profitable markets. While cannabis is subject to restrictions, it’s becoming one of the most profitable businesses to venture in. The global demand for cannabis exceeds the supply and regulations in place. However, the recent wake of legalizations gives hope to a promising future.

January 13, 2020 / by / in
Emerging Cannabis Markets to Watch in 2020

Although the federal government keeps dragging its heels, more and more states keep legalizing cannabis. When recreational cannabis sales started in Illinois on January 1, 2020, the state’s lieutenant governor, Juliana Stratton, bought a can of popular microdose gummies from a dispensary.

On January 1, Illinois became the 11th state to sell recreational marijuana. The new year may bring even more opportunities to entrepreneurs that want to enter the legal cannabis market.

Interested parties should keep their eyes on the following six markets.


Vermont’s state government has already made significant moves toward legalizing cannabis sales. In 2018, Vermont passed laws making it legal for adults 21 and over to possess and grow cannabis.

In 2019, the Vermont House and Senate even started the process of approving marijuana sales. Unfortunately, the House went on break in May, leaving the final steps unfinished.

Pro-legalization advocates believe that the state will pick up the cause in 2020 to finalize sales. Of course, there is some opposition. The majority of the state’s citizens and legislators side with legalization, though, so there are good signs that Vermont will become the next state open to cannabis retail businesses.

New York

New York is an interesting state with a sharp divide between the opinions of people living in the urban south and those living in the more rural north.

The divide has frustrated pro-legalization activists in New York City for well over a decade.

With Andrew Cuomo as New York’s governor, the rest of the state may finally get the push it needs to catch up. Cuomo says that he plans to make legalization a priority for 2020. Part of his plan includes initiatives that should appease cautious legislators in Albany. For example, Cuomo wants to:

  • Create an Office of Cannabis Management that would regulate sales of medicinal and recreational cannabis.
  • Fund a hemp and cannabis research facility at the State University of New York (SUNY).
  • Work with neighboring states to prevent illegal, cross-border sales.

New York couldn’t get the job done in 2019, but 2020 brings new hope to cannabis entrepreneurs.


Advocates in Arizona have been trying to legalize medicinal cannabis since the mid-1990s. Each attempt brings the state closer to legalization. Many people believe that 2020 will bring medicinal and recreational sales to the state.

In 1996, 65% of Arizona voters supported a ballot initiative that would let doctors prescribe cannabis. When legislators removed the prescription option, Arizonians voted against the initiative.

Voter support went down from there. In 2002, voters did not support medical cannabis. In 2010, 50.1% of voters supported medical marijuana. The law, however, included several limiting provisions that made it ineffective for many of the state’s residents.

A big push for recreational cannabis came in 2016, but the ballot initiative failed when only 48.7% of voters supported it.

Why would anything change in 2020? Mostly because it took monumental amounts of money for politicians and certain companies to change voters’ minds. There are some signs that no one wants to make such a financial commitment in 2020, which could mean that voters finally get the access they’ve asked for several times over the last few decades.

Also, another ballot initiative will appear in 2020. Although, there is some opposition.


Florida already has medicinal marijuana, which is great considering that the state struggles with one of the country’s highest overdose rates. Many people find that access to cannabis can curb cravings for opioids.

Evolving from medical to recreational cannabis takes a lot of political will, though. At the beginning of 2020, it looks like the state lacks enough signatures to get a voter initiative on the November ballot. Advocacy groups have until February 1 to get the signatures they need.

In other words, Florida has a fighting chance. If full legalization doesn’t happen this year, then the state has, at the very least, taken one more step to recreational cannabis.

New Jersey

Depending on which news source you pay attention to, recreational cannabis will “absolutely pass in 2020” or it “has absolutely no chance of passing in 2020.”

Both perspectives involve a lot of wishful thinking.

Here are the facts:

  • New Jersey has failed to pass recreational cannabis laws in the past.
  • Lawmakers have agreed to put recreational cannabis on the 2020 ballot.
  • The state government doesn’t have to abide by the voice of the voters.
  • Governor Phil Murphy supports full legalization.

There’s a good chance that New Jersey will soon get legal cannabis. 2020 is a good time for businesses to start exploring their options. Realistically, though, the state probably can’t have its laws in place until 2021.

New Mexico

New Mexico probably seems like a long-shot to most people who don’t know much about the state, which has a reputation for conservative thought. The reality is that New Mexico has a diverse, somewhat unpredictable citizenry that lean conservative on some issues and liberal on others. Not that cannabis legalization is necessarily a right or left issue, of course.

The good news for cannabis entrepreneurs is that recently-elected Governor Michelle Lujan Grisham has put legalization on her list of accomplishments for 2020. Her list also includes crime prevention, college tuition assistance, and importing prescription drugs from countries with lower prices.

Hopefully, cannabis legalization will not become a bargaining chip that gets sacrificed for the governor’s other priorities.

Recreational cannabis failed last year, but lawmakers have made changes to their approach. The majority of New Mexico residents say they support legalization. Now, it’s up to the legislature to make a decision.

No one knows how state laws will evolve. Cannabis businesses need to pay close attention to these six states, though. They could represent excellent opportunities for growth.

January 12, 2020 / by / in
Things to Consider When Buying or Selling a Cannabis Business in California

Buying or selling a business is a complex undertaking in most situations. But operating in the cannabis industry adds extra layers of difficulty. It’s highly regulated, and the laws may vary greatly from one jurisdiction to another. This is true even within a single state. In California, you must review several considerations before attempting to launch a cannabis business or transfer ownership of an existing cannabis entity. Be aware that industry regulations are evolving. Changes may occur from one legislative term to the next. The following are some of the many factors you must consider when buying and selling a Cannabis Business in California.

Buying a California Cannabis Business

To purchase a company that operates in the commercial cannabis field, you need to consider registration, licensing, and permit requirements for the state, county and city you will be operating in. The type of cannabis business you’re considering and any employee requirements are a couple of the things you need to review. You must also look closely at any rules and regulations that are specific to the city the business is in.

Licensing Authorities

California does not permit transfer of cannabis licenses. When purchasing a cannabis business, you need to obtain your own license. California has created three separate state-level licensing entities for the cannabis businesses.

  1. Bureau of Cannabis Control — The BCC Bureau issues licenses to businesses that sell, distribute, trade and test medical cannabis and cannabis for recreational adult use. It also handles licensing for temporary events. This Bureau issues licenses to cannabis distribution, manufacturing and retail microbusinesses, as well.
  2. CalCannabis Cultivation LicensingThe licensing branch of this California Department of Food and Agriculture division issues licenses to businesses that cultivate cannabis in California.
  3. CDPH’s Manufactured Cannabis Safety Branch — The MCSB is a division of the California Department of Public Health that regulates the manufacturing of commercial cannabis in the state.

Before buying a cannabis business, educate yourself on the licensing requirements of the California authority you will be dealing with. These typically include background checks and surety bonds. Depending on the type of business you’re licensing, they can also include inspections, environmental reviews and many other demands.

Business Type

The laws and regulations governing a cannabis business vary depending on the type of business you’re operating. Will you be growing cannabis or manufacturing, selling and distributing cannabis and cannabis products? These decisions not only determine which licensing authority you must use. They also impact how extensive the process is, what you need to do to ensure compliance and what the related expenses might be. For example, businesses that cultivate cannabis are subject to the most regulation. But manufacturing edibles includes many additional expenditures, like setting up a commercial kitchen, brand development and marketing. Don’t forget tax implications.


You’ll need staff to run your cannabis business. It’s a booming industry and there’s lots of competition. California leads the way in cannabis employment numbers. But as more states enter the fray, it’s likely to become more challenging to attract experienced, qualified staff. Consider industry salary standards and how difficult it will be to maintain good employees and hire new ones, when necessary. Fortunately, California currently has no special employee licensing or certification requirements for cannabis workers. Though they do need to be 21 and pass background checks.

Local Legal Considerations

Municipalities throughout California address commercial cannabis regulations differently. Some don’t allow these businesses at all. In the ones that do support the cannabis industry, the laws governing licensing and operation may be more strict and demanding than the state level laws. For example, in Los Angeles, Proposition M breaks licensing into three phases, wherein existing medical marijuana dispensaries enjoy a grandfather clause. But as a buyer, you need to check whether the dispensary is on the city’s EMMD list. Other California cities have enacted their own local laws that you must be aware of before buying an existing cannabis business.

Selling a California Cannabis Business

As the owner of a cannabis business in California, you are aware of its potentially high value. But when selling, to attract a quality seller and make a good profit, you need to document everything. Give your buyer a reason to work with you and show them that your business is organized and well-run. You can make this impression with the following documentation.

  • Licensing Documents — Demonstrate proof of state licensing and compliance with all state and local regulations and requirements.
  • Proof of Ownership — Offer documentation of who owns the business. If it’s ever changed hands, ensure you can demonstrate legal transfer of ownership.
  • Current Contracts and Agreements — Operating a business requires many business transactions with vendors, suppliers, leasing companies, employees and other entities. Provide these to a buyer so they understand their ongoing obligations.
  • Accounting Records — Show your buyer what they’re getting into with detailed bookkeeping and accounting records of how your business is run. Reveal profits, losses, debts and projections.
  • Tax Records — Provide proof that you’re in compliance with tax laws and regulations.
  • Disclosure of Negative Factors — If you have legal issues, pending claims or lawsuits, be sure to reveal these issues to your buyer. Retain control of the narrative by being upfront and disclosing first.

Whether buying or selling a cannabis business in California, you must carefully review all the legalities. Look at laws and regulations on the state, county and city level to ensure full compliance. Turn to the services of professionals in the real estate, tax and legal fields. Be sure they have experience with commercial cannabis. Planning, knowledge, education and preparation are key to a successful business transaction in this industry. Perform due diligence before you sign.

January 9, 2020 / by / in
Cannabis & Hemp Insurance: Expectations for 2020

The hemp and cannabis industry experienced a few pleasant and not-so-pleasant surprises in 2019. Regardless, its value chain—primary, including seed providers and cultivators; secondary, comprising product manufacturers; and tertiary, consisting of retailers and supporting services providers—has flourished.

Cannabis/Hemp Industry in 2019

The amount of land that U.S. farmers are licensed to grow hemp has increased much more than in 2018. Hemp’s removal from the federal Controlled Substances Act via the 2018 Farm Bill and the ease of shipping it across state borders has further aided its production. Reports show that there is also a constant capital inflow into the cannabis industry.

In August 2019, the National Credit Union Administration allowed credit unions to serve compliant hemp businesses. The Food and Drug Administration is researching the safety of hemp-derived CBD. The Environmental Protection Agency is reviewing applications for hemp crop protection tools for 2020.

Federal drug authorities updated their guidance to reiterate that hemp is no longer a controlled substance. Now, 41 U.S. states have legalized hemp agriculture, which would raise employment in the industry. The industry will need not just growers or transporters but also personnel well-versed in finance, law, science, compliance, information technology, and more.

The industry is awaiting the fate of the Secure And Fair Enforcement (SAFE) Banking Act, which would give cannabis/hemp businesses access to traditional banking services and free them from insecure cash-only operations.

For now, federal regulators have stated that banks are not required to file a Suspicious Activity Report (SAR) on customers who cultivate hemp subject to applicable laws and regulations. Although banks do not have to accept hemp accounts, such clients can be treated like customers from other legal industries.

However, in the midst of all such positive developments, many publicly traded cannabis companies registered double-digit losses in the second quarter of 2019.

Opportunities for Cannabis/Hemp Insurance in 2020

Eligibility for USDA programs: Hemp farmers will be eligible for many United States Department of Agriculture (USDA) programs, including loans, some crop insurance policies, disaster aid and conservation schemes in 2020.

The USDA’s Risk Management Agency (RMA) has announced insurance coverage for industrial hemp growers from areas covered by hemp plans with USDA approval or who participate in approved state or university research. They can obtain insurance coverage under the Whole-Farm Revenue Protection.

USDA’s Agricultural Marketing Service (AMS) is formulating regulations for producing hemp and for submitting state, territorial or tribal plans. Once this process is complete, RMA, the Farm Service Agency (FSA), and other USDA agencies will announce the eligibility criteria for their programs, such as farm loans and disaster assistance. Farmers may also be able to buy FSA’s Noninsured Crop Disaster Assistance Program policies.

Legitimacy and rights: The USDA announcement will legitimize hemp as a row crop and may also help farmers to access other rights.

Availability of hemp products: With lesser federal regulations on manufacturing and distribution, hemp products will be easily available. Total legal sales of cannabis are estimated to reach around $66.3 billion by 2025.

New insurance carriers and policies: More insurance providers will enter thecannabis/hemp insurance arena. Businesses will enjoy higher liability limits. More outdoor cannabis crops will be covered, along with workers’ compensation for businesses. If the Safe Banking Act becomes law, more such opportunities may be possible.

Hemp growers, testing labs, and other organizations with access to sensitive product or personal data will need Health Insurance Portability and Accountability Act (HIPAA) compliance. They are legally liable to protect such data and may need cyber insurance policies.

Challenges for Cannabis/Hemp Insurance in 2020

The hemp/cannabis industry faces unique risks because it is young and has a quasi-legal status. Insurance has remained scarce and often unaffordable because insurers are not yet sure of the risk profiles of hemp/cannabis businesses.

Cultivation woes: Although hemp may bring farmers profits, growing it can be quite laborious. Many may not have the necessary equipment to cope with it. New machinery and retrofits can be expensive.

They also face many other problems, including seed fraud, thieves stealing plants mistaking them for marijuana, and oversupply. Apart from these, inclement weather and delayed plantingmay cause the harvest to be less than profitable.

Product liability insurance: The product liability premium rates for cannabis businesses may rise in 2020 because of the increasing E-cigarette or Vaping Product Use-Associated Lung Injury (EVALI) cases. Insurance providers may be stricter about underwriting and ask for insurance certification from vendors and additional insureds on third-party policies.

Preparation for future growth and expansion: As the initial excitement of starting up or entering the industry is dying down, businesses now have to take stock of further growth needs. Those who do not have good financial backing, robust systems, or well-managed processes may face challenges.

As many companies join hands to form multi-state operators, the U.S. Securities and Exchange Commission (SEC) or investors will scrutinize directors and officers to check the investments they made. This might increase the demand for directors and officers (D&O) liability insurance in the future. 

Regulatory testing: The standards for testing and grading of hemp/cannabis products in the industry are not uniform or reliable. Although many cannabis businesses standardize their ingredient labeling, some falsify labels, leading to lawsuits and claims. Penalties, fines, and non-compliance liabilities may increase if states start product testing and other regulatory activities.

Just like all other businesses, hemp/cannabis businesses also need insurance to protect their interests and handle liability exposures. They have had difficulties in obtaining it until now. However, the positive developments in 2019 and the work of agencies, such as Skyfront Insurance Services, which serve and protect compliant cannabis businesses bring hope to the cannabis industry.

December 24, 2019 / by / in
US Legislators Drop Burdensome Regulations That Kept Banks and Hemp Apart

When Congress passed the Hemp Farming Act of 2018, a lot of farmers, manufacturers, and retailers assumed that they could start selling their products just like other companies do.

These new businesses already had a lot of regulations to follow, such as ensuring THC levels below 0.03%. It didn’t take long before CBD and other hemp businesses discovered another roadblock.

Despite federal legalization of hemp, banks that worked with hemp companies needed to file “suspicious activity reports” about their clients.

Congress legalized hemp, but it still took a cautious approach that hurt the burgeoning industry from growing as quickly as expected.

Some banks filed their reports and continued working with legitimate hemp companies. Others didn’t want to deal with the extra work, so they decided not to accept hemp companies as clients.

Finally, Congress has found a solution that should benefit all parties.

What Are Suspicious Activity Reports?

All financial institutions are required to submit suspicious activity reports when they believe that a customer is using their services to launder money or commit fraud. The Treasury Department sets a 30-day window for banks and similar institutions to submit reports.

Suspicious activity reports can make it considerably more difficult for criminals to borrow, save, and access cash from legitimate institutions. No one doubts that the reports can do good things.

Unfortunately, many financial institutions felt that they needed to write reports about clients earning money from hemp. Hemp, after all, is a type of cannabis, which the federal government has not legalized.

Submitting suspicious activity reports assured that banks stayed on the right side of the law. In the financial industry, it makes sense to take an overly-cautious position so you never get fined by the government.

Not surprisingly, the most cautious institutions choose to deny clients earning money from hemp and CBD. This approach created a hardship for farmers, manufacturers, and retailers. Experts believe that the CBD market could reach $20 billion by 2024. Despite the industry’s great value and rapid growth, a lot of banks simply did not want to run the risk of accepting their business.

Congress’s Latest Move Makes Hemp Financing Easier

In November 2019, the Federal Reserve’s deputy general counsel told a group of banking leaders that the government would soon iron out issues that keep banks from working with the hemp industry.

Banks were already working on internal regulations for the industry. Without a clear sign from Congress, though, they couldn’t feel confident about their decisions.

The change in federal policy finally came in December 2019 when regulators stated that financial institutions shouldn’t consider hemp businesses “suspicious” anymore. Banks can still submit suspicious activity reports when they have evidence that a company is breaking the law, but they are not required to act as the “hemp police.”

The new policy essentially shifts responsibility from banks to growers and suppliers. Until recently, the government heavily relied on banks to report suspicious activity in an industry that financial institutions no little about. After the Farm Bill, banks found themselves in a precarious position. Now, the problem has been solved by recognizing that banks are not responsible for the activities of legal businesses.

Why Hemp Producers Need Banks

Anyone in the hemp industry will immediately realize the benefit of accessing legitimate financial institutions. The new friendliness between hemp and banking means that hemp producers will have easier access to:

  • Business loans that help companies grow in a competitive industry.
  • Low-interest lines of credit businesses can use for payroll and other expenses.
  • FDIC-insured accounts that protect money from theft.
  • Checking accounts that make businesses look more reliable when dealing with vendors.

Getting blocked from the financial industry has created a significant hardship for those in the hemp industry. Now, the federal government says it will take a more active role.

The Latest Approach to Hemp Regulation

For the most part, hemp growers understand that they can make a lot of money by following federal and state guidelines. A few farmers, however, have tried to grow high-THC cannabis under cover of industrial hemp.

The government will take a more active role in regulating the industry to make sure companies know that they will suffer repercussions for breaking federal cannabis laws. This change will likely mean that federal- and state-trained officials will spend more time visiting hemp farmers and testing their products. If the hemp has more than 0.03% THC, then companies will face consequences.

Unfortunately, the government doesn’t seem to have a policy that defines the consequences. A farm may get a warning for selling hemp with THC levels slightly higher than 0.03%. A farmer obviously growing cannabis intended for intoxication may face jail time as well as fines.

Much of the regulatory tests may happen without the knowledge of farmers and producers. Government agencies could purchase products from stores, test for THC levels, and determine whether the companies follow the law.

More Regulatory Clarifications to Come

Federal clarification makes it much easier for banks and hemp companies to do business together. Both industries will find that a relief that helps them grow and earn more money.

Still, hemp continues operating in a gray area because a small mistake could make products illegal. Hopefully, the government will continue refining its policies to help everyone involved make hemp products that benefit people and profits without unintentionally breaking the law.

December 23, 2019 / by / in
How Illinois Cities and Towns are Preparing for Cannabis Legalization

More states are legalizing cannabis both for medical and recreational use, a move that has gained increased acceptance among members of the general public. The reality of these law changes has some cities and towns scrambling to adjust. Many move to change their zoning laws and add city ordinances governing sales to deal with the new legislation. Others are bracing for the cultural changes they fear will follow. This situation is currently happening in Illinois, where recreational cannabis will become legal on January 1, 2020. When legal pot hits the Midwest, it has to say something about cultural attitudes.

Illinois Communities

Culturally, Illinois is divided into two basic parts: Chicago and Downstate. Chicago and its suburbs tend to be far more liberal than the downstate population, which is largely rural. So the legalization of cannabis has received mixed reviews in Illinois, although even some small conservative towns are eagerly anticipating the increased tax revenue generated by recreational cannabis sales.

Illinois is also bordered by some very conservative states such as Missouri. Although Missouri has technically legalized medical marijuana, many providers are reluctant to enroll patients in the program, partly because medical dispensaries are not opening until mid to late 2020. These circumstances mean that Missouri law enforcement is on high alert for Illinois cannabis sales that can easily cross the river. This type of legal quandary will undoubtedly play out in more states as cannabis is legalized in Mid-America and other more rural areas.

Zoning Laws

The state law allows individual cities and towns to decide if they will sell recreational marijuana. Chicago lawmakers have divided the city into seven zones and will allow 13 marijuana retailers in each. The mayor has introduced a zoning ordinance to ban recreational sales in the city’s famous Loop and Magnificent Mile area, however.

Some of the Chicago suburbs have decided to ban recreational sales. For instance, Arlington Heights will not allow recreational marijuana sales but Buffalo Grove will.

Small downstate towns like Quincy have approved recreational sales, largely to get much-needed tax revenue. Despite some last-minute zoning concerns, the city did vote to allow recreational cannabis sales in already zoned commercial areas with the stipulation they observe a 100-foot setback from daycare operations and schools. Several medical marijuana dispensaries have been designate dual sites by the state, meaning they can sell recreational marijuana as well as medical.

Local Ordinances

Illinois towns have hurriedly adopted new ordinances to deal with the recreational sales. Quincy’s recently adopted regulations include:

Illinois residents 21 and older can possess cannabis with a limit as follows:

  • 30 grams of cannabis flower
  • Up to 500 milligrams of THC contained in cannabis-infused product
  • 5 grams of cannabis concentrate

Non-residents 21 and older can possess cannabis as follows:

  • 15 grams of cannabis flower
  • 2.5 grams of cannabis concentrate
  • Up to 150 milligrams of THC contained in a cannabis-infused product

Since Quincy is a Mississippi river town, law enforcement is concerned that Missouri residents will buy their cannabis in Illinois and transport it over the bridge to Missouri where it is still illegal. Quincy police don’t plan to specifically try and stop this transport, but Missouri law enforcement may be tempted to closely monitor bridge traffic.

Tax Revenues

Illinois lawmakers are hoping for hundreds of millions in tax revenue due to the change in cannabis law, but officials from other states urge caution. Revenue estimates have often proven to be wrong, particularly in the early days of cannabis legalization.

Local tax revenue estimates are also uncertain. In the Quincy area, the county board is taxing the product at a max of 3.75. The city voted to tax the sales at the maximum of 3%. Although the town leaders don’t really know what kind of revenue to expect, they are hoping it will make a difference. Currently, the town is suffering from a revenue shortfall that has led to the recent adoption of an unpopular food and beverage tax.

Nationwide Concerns

What is currently happening in Illinois has already played out in other states, but the Midwestern dynamics are new. The only other Midwestern state that allows recreational cannabis sales is Michigan, and its law just went into effect December 1. Until now, recreational sales were legal in states that could be considered far more liberal than their Midwestern counterparts. These laws challenge what some residents still consider Midwestern values. While alcohol freely flows in the rural areas, cannabis has always been looked at with suspicion, even for medical use.

Clearly that attitude is changing since some Illinois small towns have voted to allow recreational sales. The state did not impose those sales on them. Now they are working to balance their concerns about pot with its business potential.

First Year Results

Legal cannabis has come to the heartland, and that may have long-ranging effects. These changes may influence other “fly-over states” to embrace recreational marijuana. The upcoming year will be quite informative. If things go well in Michigan and Illinois, can legalization in Missouri and Iowa be far behind?

Illinois has always been a odd blend of urban and rural concerns. In fact, downstaters often wish aloud that Chicago would spin off into its own state and leave the more conservative areas alone. But no downstate town had to allow recreational marijuana. Quincy voted to, and it’s not a progressive town in any way. That act alone indicates that the cannabis battle may be nearing its end. It’s not unreasonable to think it will be legal nationwide in just a few years, even if the federal government fails to act.

December 15, 2019 / by / in
Smart Funding-Strategic asset-building is the way to go when financing your cannabis business.

Debt often comes with negative connotations, but savvy business owners know that it’s an integral part of their foundation story. Without debt there is no credit and in many cases without both of these elements, there is no business. Starting a cannabis business requires a lot of overhead. While some cannabis businesses may be able to get by self-funded or by crowdfunding, most scalable operations will require a sizeable amount of capital to reach profit.

With the regional disparity in legislation, cannabis entrepreneurs only have a few other options when it comes to raising that capital: investors or lending. While it may seem like a dream to have a team of investors that believe in you and your business, there are downsides to going down the investment route. With an investor attached, you are agreeing to give them a piece of your hard earned revenue and adding another person that major business decisions need to run through. Most notably, having an investor involved may complicate your long term goals such as selling your business or growing your profit margin. Being smart and strategic about how you fund can not only get your business off the ground, but also set you up for long term success.

Turning Debt into Assets 

Business plans tell a story. Realistic business plans account for time spent in the red and provide a road map to achieving profit. What valuable items can you lend against to create assets in the long run? In order to obtain an equipment or real estate loan, the item you are lending against must have market value. In the event that borrowers are unable to make their payments loaning capital toward items with market value give lenders the potential to resell the property or equipment if faced with this; however, that shouldn’t be the case. At, we have a very thorough underwriting process and work tirelessly to set our borrowers up for success with loans they can comfortably afford.

Equipment Financing

Equipment financing is a great way to turn your debt into assets. Taking out a loan against your equipment will help you afford exactly what you need to get your business running. Too many business owners try to cut costs by opting for less effective and expensive equipment. With equipment financing, not only can you invest in the best, but you are also thinking long term and working toward turning that equipment into an asset. This will eventually grow your profit margin or provide your business with an additional asset if you are looking to sell your business or just the equipment itself if you need an upgrade down the line.

We are frequently asked what kind of equipment we finance. Although lights and cultivation equipment are essential to the cannabis business, these lower-price point items usually fall under our unsecured capital funding program. Extraction equipment is a great place to start when looking to finance equipment with a resale value.

Real Estate

Real Estate is always a good idea if you’re ready for it. Although it’s a major commitment and shouldn’t be taken lightly, real estate can be a major asset for your company if you’re in a position to invest in it. Financing your real estate is a more-affordable way to pay for your business headquarters. Leases that are 420-friendly can be steep. Owning your own property and paying down a mortgage is more cost effective and adds value to your business overall. 

There are a few requirements that business owners must meet to purchase real estate. Firstly, you must have a downpayment. Typically, businesses that have been around for a few years are more prepared for this type of investment, but in some cases, we can help startups with this using our FICO-based program. Just as lending should be built into one’s business plan, business owners should spend a good amount of time reflecting on if real estate is the right investment for them.

Lending Experts is a direct lender, syndicate, and brokerage firm and offers so much more. Our staff is consultant-minded and works tirelessly to help clients get the most advantageous loan possible. Founded by a team of long-time bankers, we are knowledgeable about the pressure point that lack of funding presents to the cannabis industry and we are focused on alleviating this and helping more and more businesses obtain the funding they need. Our success stories are 400 and counting. Will you be the next?

For more information on our loan programs, visit us at, email us at or call us at 424-256-3090. 

December 15, 2019 / by / in
Wildfires and PG&E Outages… a Nightmare for California Cannabis Companies

October holds significance for many California cannabis companies. The month is the peak of wildfire season, as well as main harvest time for cannabis plants grown outdoors. Past years’ wildfires ravaged marijuana farms, many of which never recovered or still are rebuilding. The decision by local utility company Pacific Gas and Electric (PG&E) to prevent fires by scheduling power outages for several days in October directly and indirectly impacted cannabis companies across the state.

Overview of the California Wildfires and PG&E Outages

Transmission lines operated by PG&E have been linked to wildfires that have decimated several California communities. PG&E’s power lines sparked 2018’s devastating Camp Fire, California’s deadliest fire on record. The wildfire not only killed 88 people and razed the entire town of Paradise, it destroyed more than 1.6 million acres, making Camp Fire the worst in terms of sheer scope as well. State fire officials also deemed the power company responsible for 12 of the fires that raged through California in October 2017.

In the past two years, at least 17,000 wildfires burned more than 5,000 square miles of California.

In October 2019, faced with red flag weather conditions of high winds, low humidity, and high temperatures, PG&E decided to implement what it termed “Public Safety Power Shutoffs.” The utility pulled the plug on electricity early in the month to 800,000 customers in 34 affected counties, impacting from 1.5 to 2.5 million people. At the end of the month, high-wind conditions led to outages to 973,000 customers. Businesses and homes were without electricity for up to several days.

Impact to Growers

Wildfires and power outages have wreaked havoc on many of California’s cannabis companies, which already were vulnerable thanks to the high costs of legalizing their businesses and limited availability of insurance coverage. Estimates of the impact made by the 2017 fires speculate 30 to 40 percent of the state’s marijuana growers were affected in some way, whether by the fires themselves or the smoke and toxic particles released in the air. The economic damages from the PG&E blackouts are not fully known. The so-called Emerald Triangle, the source of significant marijuana supplies, was particularly impacted by the blackouts, though; Humboldt County, for example, was the only county to completely lose power during the blackouts. 

Lost Crops

An obvious threat to cannabis comes from the direct destruction of crops lost to flames. In 2017, for example, in Sonoma County alone 30 pot farms and three pot manufacturers were destroyed. Though California’s wildfires have raged less in 2019, blazes still scorched more than 122,000 acres since the start of October. At least 58 fires have burned in 27 of the state’s 59 counties, leading to the evacuation of more than 200,000 residents during a declared state of emergency. Sonoma County, with 79 cultivator licenses, suffered the most damage, with a reported 77,758 acres burned in October. Also that month, the counties of Santa Barbara, Mendocino, and Monterey, with more than a thousand cultivator licenses among them, lost hundreds of acres each.

The loss of power to dozens of counties can have even broader ramifications. All sectors of the cannabis industry require electricity, including for lights in propagation, controlling the environments of indoor facilities, and operating HVAC and processing equipment. California’s cultivation industry uses 2.3 million megawatts of electricity annually. A power outage can destroy or damage crops at various stages of the cycle.

During October, the bulk of the outdoor crop is harvested and comes in from the field for the processing and drying stages. Cannabis farmers who harvested their crops before the first power shutoff on October 8 were more impacted. Electricity powers the circulation and exhaust fans, dehumidifiers, and HVAC necessary for ideal drying conditions. For those with freshly-cut plants in drying sheds, their crops were at risk of rotting. Fresh cannabis can develop mold after only two days of humid, static air. The quality of the harvest also can deteriorate, since cannabis’ aromatic terpenes and active cannabinoids, such as THC and CBD, begin degrading above 68 degrees.

Power outages can ruin crops grown indoors as well. Prolonged periods without indoor light stresses the plants, which can cause the plants to flower prematurely or to hermaphodite and pollinate.

Contaminated Soil and Plants

Cannabis plants may be spared the flames, but they still face potential contamination from wildfires. Airborne toxins like pesticides, ash, soot, insulation, building materials, and more can taint bud and would be either a danger to consumers or produce an inferior product:

  • Cannabis in the seed stage can be damaged by toxic ash introduced into the soil.
  • Plants in the vegetative state can be harmed if toxins impact their root systems.
  • Cannabis is in its reproductive, flowering cycle, is the most vulnerable for contamination, and smoke can coat the resinous flowers with dangerous toxins and foreign materials.
  • Bud impacted by smoke may suffer from stunted growth and cannabinoid levels.

Even if smoke-damaged plants pass toxin tests, their flavor likely will be affected and undesirable.

Impact to Manufacturers and Dispensaries

The PG&E power outages caused cannabis businesses to lose access to the California Department of Public Health’s inventory tracking system, CCTT-METRC. Foe some, operations could continue via paper as long as the database is updated within three days of regaining power. Regulations permit farmers to switch to hand-written transfer manifests, and retailers can sell with written receipts. Regulations are less clear as to whether transporters and distributors can transfer inventory during an emergency.

Less Products, Lost Productivity

Limits to cannabis crops, whether due to wildfires or power outages, affect the entire supply chain. Manufacturers have less and lower quality raw materials with which to make products. Dispensaries receive fewer products, and they lose business when consumers are dissatisfied.

Manufacturers like extract makers also suffer from power outages. The volatile chemicals they use to make cartridges and concentrates must be kept cool. Fresh-frozen cannabis products require constant minus 38-degree temperatures. Without electricity, melting results. The product can be damaged in less than 24 hours when water pools in the bags.

Future Impact

Recovery from disasters like wildfires and power outages challenges most cannabis companies, particularly due to industry-specific obstacles encountered because marijuana remains illegal at the federal level. Unlike traditional businesses, marijuana businesses and farms cannot qualify for access to FEMA relief funds or get adequate insurance to cover their losses. Most banking institutions will not fund loans to rebuild.

California’s woes extend beyond the cannabis industry as well as state borders. The state produces 58 percent of the cannabis cultivated in the United States. Losses affecting the multi-billion dollar industry are felt in other areas of the state and national economy as well.

Most California cannabis companies businesses will persevere. Those that are located in areas prone to electricity outages or wildfires are learning from the losses and better preparing their emergency responses.

November 12, 2019 / by / in
Mitigating Cannabis & Hemp Industry Risks With Insurance

Those involved in the hemp and cannabis industry need insurance just like everyone else. But this particular industry has special challenges and considerations.

Many insurance companies remain cautious about covering the hemp and cannabis industry because of marijuana’s classification as a Schedule 1 narcotic in the eyes of the federal government.

“Risk professionals representing cannabis businesses in the US, as well as landowners and landlords, can face a range of issues as a result of the disconnect between state and federal cannabis laws,” writes Krizzel Canlas for Corporate Risk and Insurance magazine.

The article goes on to recommend that those involved in the industry in any way need an insurance company intimately familiar with the laws and regulations and their differences at the state, local, and federal levels.

Ian Stewart of Wilson Elser, with more than 20 years of experience in complex litigation disciplines including cannabis, sees the potential for a wave of consumer class action lawsuits concerning the product itself, as well as liability to prescribing doctors.

Along with general liability and property insurance, those with businesses in the Cannabis and hemp industries need to think about:

  • Indoor Crop coverage
  • Finished Stock coverage
  • Stock While in Transit coverage
  • Commercial Auto coverage
  • Workers Compensation
  •  Directors & Officers insurance coverage

Conflicting state and federal laws, regulations concerning the treatment of cannabis and hemp products, and the reluctance of major carriers to get involved with the cannabis industry can present obstacles in finding the right insurance policy. Cannabis and hemp businesses are faced with purchasing substandard policies that may leave gaps in their coverage.

Skyfront Insurance Services can help to meet these needs. Founded by cannabis industry experts, Skyfront runs an agency “dedicated 100% to serving and protecting top tier compliant cannabis businesses.”

They understand the cannabis industry at Skyfront, and can cover you “whether you operate a direct plant-touching business or an ancillary services firm.”

Their products run from standard business insurance to the most specialized in the market, including:

  • General Liability
  • Product Withdrawal/Recall
  • Product Liability Insurance
  • Equipment Breakdown
  • Cannabis & Hemp Real Estate
  • Crop Loss
  • Workers’ Compensation
  • Distribution / Transportation / Cargo
  • Business Interruption
  • Property Coverage
  • Wrap Up Liability
  • Earthquake and Flood Coverage

What exactly do each of these cover and why do you need them?

General liability covers you from things like bodily injury, property damage, and personal injury that occur at your business.

Product Withdrawal/Recall insurance covers out-of-pocket expenses to insured distributors, retailers, vendors, customers or other third parties resulting directly from withdrawals or recalls of product.

Product Liability Insurance protects you against financial loss arising out of the legal liability incurred by an insured because of injury or damage resulting from the use of a covered product or out of the liability incurred by a contractor after a job is completed (completed operations cover).

Crop insurance is purchased by agricultural producers, including farmers, ranchers and others to protect against either the loss of their crops due to natural disasters or the loss of revenue due to declines in the prices of agricultural commodities.

Cargo Insurance covers loss and/or damage during the movement of cargo from one point to another. Shipment coverage can be by sea, air, or inland. Policies are tailored to suit individual shipper’s needs. Coverage can be provided for all risks or named perils basis.

Wrap-up insurance is a liability policy that serves as all-encompassing insurance that protects all contractors and subcontractors working on large projects costing over $10 million. The two types of wrap-up insurance are owner-controlled and contractor-controlled.

The remaining coverages meet the needs of businesses in general, but they all highlights the need for thought and risk assessment when choosing coverage for your cannabis or cannabis-related business.

Careful due diligence, legal advice from counsel familiar with this area of law, and proper insurance are always a wise choice in the cannabis and hemp industries.



September 26, 2019 / by / in