Owning a businesses is part of the American dream. While some businesses, such as Apple, are excellent examples of this dream, for most people the reality is less glamorous, especially when in the cannabis, hemp, or CBD industries. However, cannabis & hemp startups can still be quite successful, but require proper funding an capital.
The cannabis and hemp industry is no longer an underground enterprise due to changes in state laws and the acceptance of marijuana as a medical treatment and recreational substance. While growing and selling these plants is still illegal in some areas, in others, it has become a profitable and aboveboard business. Since legal issues do still exist, financing these businesses can be tricky, but several financing options do exist.
Cannabis and Hemp Basics
The overall cannabis market is expected to hit $25 billion by 2025. The market for hemp-derived cannabidiol (CBD), a product touted for its medical uses, should hit $1 billion by 2020. The entire industry is booming, in part because the medical community has started to embrace the health benefits of both hemp and marijuana.
The legal landscape has changed as well, with states like California and Colorado completely legalizing these substances. Other states such as Illinois have made medical marijuana legal and decriminalized recreational use. States such as Texas, Oklahoma and Kentucky still make cannabis and hemp use illegal for any reason.
The federal government also considers their use a crime, but under the Obama administration, state laws were recognized and federal law enforcement did not intrude. Current Attorney General Jeff Sessions seemed poised to enforce these laws, but the Trump administration has since backed off this stance, much to the relief of those in the industry. However, this contradiction between state governments and the federal government makes acquiring funding for cannabis and hemp production and sales more difficult.
For those who want to break into the industry, getting a bank loan is highly unlikely. Most banks are insured by the FDIC, or Federal Deposit Insurance Corporation. The FDIC will not insure any bank that loans money to companies that break federal law, so that eliminates the entire cannabis hemp industry. Some FDIC banks will loan money for equipment since that is a step removed from the actual product. Fortunately, those interested in the business can secure other forms of financing.
Hard Money/Private Investors
Some private investors actually specialize in cannabis and hemp hard money loans as well as other high risk ventures. Collateral for these hard money loans is based on the real estate in question and not on the borrower’s current financial status. The lenders will set some borrower qualifications, although these will be less stringent than a traditional bank’s requirements. In general, hard money lenders are a source for business owners who cannot get regular funding due to poor credit scores or those engaged in a controversial enterprise such as cannabis.
Those using hard money loans to start their business should expect to pay their lenders significantly higher interest rates, well over 10%, and have a short term to repay them, usually a year or two. At the end of the term, the loan must be repaid or other financing secured. Until the balance is due, the borrower only makes interest payments, which is a significant advantage for borrowers. The short-term nature of the loan is often sufficient to launch a business start-up.
Some private investors deviate from this formula and provide start up money in exchange for part ownership. In most of these cases, the borrower retains the power over day to day operation decisions, a long term arrangement that can benefit both parties. This arrangement also gives the borrower more time to make the business profitable.
In both instances, the loan application process should be fast and efficient, taking less time than a bank’s more complicated procedure and allowing the business to begin operations quickly.
Niche Business Loans
Niche business loan companies are another option for small businesses in general and cannabis entrepreneurs in particular. These loans frequently work for those who cannot get bank financing and need quick access to their funding. Like most financing options, using one of these companies has both advantages and disadvantages.
Applying for these loans is extremely convenient and can be done from home at any time. Also, when borrowers provide their financial information, they are making it available to a number of lenders, but their credit score doesn’t suffer since only one source is accessing their credit report.
Borrowers also are able to compare all of their options at once and find the best terms possible, reducing their loan costs.
The major disadvantage is the interest rate. Like hard money loans, the rates are significantly higher than bank loans. Also, these loan companies are relatively new, so they have a higher chance of failing than other, more established lenders.
For those entering the cannabis/hemp business, online business loans may be a good option. However, the interest rates and other terms range widely with these companies, so borrowers need to carefully research the loan before signing any loan contracts. They should also check out the company’s reputation and history before entering into any agreements.
The cannabis/hemp industry is thriving and promises investors a healthy return on their money. Since there are federal legal issues, finding financing can be complicated. Most banks will not loan money to borrowers for this purpose, so they will need to turn to private investors, hard money loans, and home equity loans. In some cases, private investors will assume part ownership in return for their money.
The federal government has shown recent signs of softening on this issue, so borrowers may be able to acquire bank loans in the not-too-distant future.
Search cannabis and hemp property and business financing options on LenderMatrix by using the property type or business industry search filters.
Though marijuana and hemp both come from the cannabis family, they are completely different plants. They look different, are cultivated differently and have vastly different uses. Most notably, marijuana contains levels of tetrahydrocannabinol (THC) higher than 3% — typically between 5%-10%, but it can be higher. This chemical is what delivers the psychoactive “high” effect. Hemp contains 0%-3% THC levels and is not psychoactive.
Unfortunately, the federal government has a history of grouping marijuana and hemp plants together under a general Cannabis species. However, recent changes are impacting this approach. And the legalities and licensing for production and sale of these “crops” vary greatly throughout the United States.
As of April 2019, marijuana is still completely illegal in 16 states. In 10 states and the District of Colombia, it’s fully legal. The remaining 24 states have legalized medicinal marijuana, but decriminalization of recreational use varies. These differing laws greatly impact licensing requirements, rules, and regulations in the states where some form of marijuana use is permitted.
Industrial Hemp is a different story and one that has changed with the passage of the 2018 Farm Bill. Hemp is now legally categorized as an agricultural product. But specific restrictions apply, requiring a great deal of oversight in its cultivation and sale. Individual states must submit plans to the federal government detailing how they plan to regulate its production and compliance with federal law. This includes licensure for growers.
Fledgling Hemp Licensure Across the U.S.
In 2018, 38 states considered, or proposed laws related to industrial hemp. The following states passed new legislation:
- New Jersey
Several states already had programs in place under the previous Farm Bill that allowed specific research and pilot programs for industrial hemp. Only a few states are still lacking legislation allowing hemp cultivation. But it’s still early days yet with respect to the new Farm Bill, and most state legislators are moving forward with laws to govern the new crop. For example, Connecticut just introduced two bills designed to allow commercial hemp farming in the state. Texas and Idaho are making similar legislative moves.
The Varied State of Cannabis Marijuana Licensing in the U.S.
For marijuana licensing, the landscape is even more confusing and varied. As mentioned previously, this is because of the lack of a federal or universal law regulating marijuana cultivation and sale. And, in fact, federal law still treats marijuana as an uncontrolled substance. But most individual states do not. So currently, state, county, and city level licensing are controlling law in each jurisdiction.
Getting a license for a cannabis-related business is difficult in any state where it’s legal. In addition to jurisdictional variances, requirements differ based on the type of marijuana business being licensed – be it for cultivation, retail sales, medical dispensary, or other uses.
At the ground level, general business licensing basics must be addressed. These typically include the following:
- Forming an LLC or incorporating the business
- Creating a Business Plan
- Requesting a federal Tax ID number / employer identification number (EID)
- Obtaining a general city or county business license (does not take the place of a cannabis operating license)
- For retailers – getting a Sales Tax Permit
- Obtaining Permits, as required by law
To operate a business that deals with marijuana, there are several additional hoops to jump through. And the licensing entity for these businesses also varies. A few examples follow:
- Secretary of State’s Office
- Department of Taxation (Nevada)
- Department of Revenue, Marijuana Licensing Authority (Colorado)
- Bureau of Cannabis Control (California)
- CalCannabis Cultivation Licensing (California)
- Manufactured Cannabis Safety Branch (California)
- Department of Health, Office of Medical Marijuana Use (Florida)
- State Liquor and Cannabis Board – LCB (Washington)
- Medical Marijuana Commission (Arkansas)
- Department of Consumer Protection (Connecticut)
Specific marijuana-related business licensure requirements are onerous. Regardless of where the marijuana business is meant to operate, getting a license is a long, involved, expensive process. There are timeframes and deadlines to abide by. Most states require residency for a set minimum of time before applying for a marijuana license. In some states, like California, operators must obtain both a local and state license.
Entrepreneurs must review the laws in the state and county where they hope to obtain a license to learn whether they need to follow “seed-to-sale” rules or if they’ll only be permitted to operate one type of marijuana business. And everyone involved will likely be subjected to background checks. These are just a small sampling of the obstacles hopeful marijuana business owners will run into.
Licensing fees are another area of great inconsistency. For example, in Alaska, a limited cultivation facility license for smaller than 500 feet combined with a new application fee only runs $2,000. Yet, in Arkansas, a cultivation licensure fee is $100,000 and requires a $500,000 performance bond. Some states have steep annual renewal fees — $75,000 cultivation renewal fee in Connecticut and a $100,000 annual cultivation fee in Illinois. Detailed state comparisons are needed to establish the most favorable investment for each individual entrepreneur.
Costly fees and complex legal requirements aren’t the only challenges in getting a marijuana business license. It’s also a very competitive field. Despite high consumer demand for marijuana, the supply side is heavily suppressed. Even in states with legal medical and/or recreational marijuana, there are numerous in-state jurisdictions that don’t allow the commercial sale of marijuana and edibles.
In California, only 118 of the state’s 481 cities permit recreational marijuana retail stores. Caps on the number of licenses allowed in applicable jurisdictions further complicate the supply and demand issue. Florida’s medical marijuana businesses have been in flux over this capping issue. The state currently permits medical marijuana (though there are legislative proposals in the State House to also allow recreational use and sales) but initially severely limited the number of medical marijuana dispensaries. An August 2018 court ruling successfully challenged the cap. The number of licenses is expected to grow in the future. However, gridlock is still a big problem due to the ongoing litigation. Regulations banning smokable medical marijuana and undetermined laws overseeing edibles are even further complicating things.
Since demand is greater than supply in the legal marijuana market, the value of these licenses has been skyrocketing. San Diego, California, marijuana retail licenses are reselling between $5 and $17 million. In Florida, the statewide number of medical marijuana dispensaries grew from 24 to 78 in 2018. But high demand boosted their value, and licenses for these businesses have resold for as much as $50 million.
In Washington, the purchase of a cannabis business doesn’t include the license, since the Washington State LCB doesn’t categorize these licenses as transferable assets. These types of issues naturally impact the value of cannabis business licenses in other jurisdictions.
Overall, the complications involved in obtaining a cannabis business license make them a rare commodity and drive up the value. This trend isn’t expected to change anytime soon. The number of states with legal marijuana use may increase, but the demand is still much greater than the projected supply. The value of these licenses will likely only continue to grow.
The Cannabis Industry Conundrum
- Locating and Procuring the Facilities– Just as with all other industries, when it comes to finding the perfect property for the cannabis industry, location is everything. Indeed, in addition to making sure that the property is large enough for the undertaking, the property must also be compliant with both the local and state cannabis laws. Since cannabis is still illegal on the federal level, many property owners will not do business with those working in the cannabis industry. Therefore, much of the work with regards to securing a property lies in finding the right landlord/ seller for your needs.
- Financing– Furthermore, finding financing can be equally if not more so difficult than finding the property to begin with. Once again, this is due to the overall issues with the legality of the cannabis industry. Although it has been proven that the cannabis industry can be quite lucrative, many banks and investors are reluctant to offer loans or investments for fear of legal ramifications.
- Services Necessary to Operate or Grow their Enterprise– In addition to obtaining property and financing, those venturing into the cannabis business must also acquire the proper licenses. This is actually said to be a relatively difficult process best handled by lawyers and other professionals. Either way, although the process can be lengthy and tedious, those venturing into the cannabis industry usually seem to believe it is more than worth the trouble.
Cashing-In on Cannabis and Hemp
Hemp and cannabis are considered cousins in the agricultural world, and that relationship has been harmful to hemp, the relative that cannot get you high (at least not without a lot of effort.) In reality, the THC in hemp must stay below .03%, making it a really ineffective recreational drug. The U.S. government has greatly restricted both hemp growth for decades, but now, with the passage of the 2018 farm bill, hemp is poised to become a major crop once more.
Marijuana growers also have much to celebrate with the loosening of restrictions in many states. Cannabis is still illegal on the federal level, however, so growers have to be extremely cautious before producing a crop. All of these restrictions can be confusing to those who want to legally grow hemp and/or cannabis. Before you invest in a crop, you need to do careful research into your state’s laws.
Hemp is now a legal crop on both the federal and state level. To many, that may sound as if anyone can grow hemp if they wish. Unfortunately, that’s not the reality. Hemp is still regulated and the law requires that you get a license from your state before you make it part of your crop rotation. The cost and restrictions of the license will vary according to where you reside. As with tobacco, farmers cannot just decide to grow it for sale but must follow state guidelines.
The federal law also did not make it legal to grow hemp for personal use. Experts speculate that those with a license to grow cannabis at home could substitute hemp plants, but the number allowed would be so small that there is little practical reason to do so.
Hemp Growing Conditions
Hemp is an especially easy crop to grow and does well in most parts of the United States. The only areas not conducive to a strong hemp crop are high mountain and desert areas. This plant grows fast and thick, muscling out weeds. Hemp requires less water, pesticides and fertilizer than corn. It is an environmentally friendly crop that does best in warm climates and well-drained soil. The seedlings do need irrigation for their first six weeks if conditions are dry. Overall, growing hemp is easier for the farmer and better for the environment than many other crops.
The profit potential is still not clear since large-scale hemp farming has largely been squashed since the 1930s. The next few years should tell the tale in that area. Hemp is used to produce CBD oil which experts believe has a number of health benefits, including pain relief. Tens of thousands of other products can be made with hemp, so the demand is certainly there.
Cannabis is still illegal under federal law. You can only grow it under certain conditions in a number of states. The bureaucracy governing its growth is far more complex than that for hemp, particularly since hemp has now been made legal under the 2018 farm bill. Plus, the rules for residential cultivation are far different than for those raising it at an industrial level. However, the cannabis industry is exploding and is proving highly profitable for many.
Residential growers in states where it is legal are allowed to cultivate a few plants. For instance, California allows residents to grow up to six plants per year.
Cannabis Growth Conditions
Industrial cultivation of cannabis can be done both indoors and outdoors, and some farmers are already deeply invested in the production of this crop. Successfully growing marijuana requires dedication and skill in order to produce the different strands desired by consumers. Some agricultural leaders are looking to shift more of their production outdoors, which will “explode” yields and make the enterprise more profitable, even with the current red-tape nightmare involved. Experts note that water usage may be one of the bigger challenges, depending on where the field is located. Growing cannabis is a more delicate process than growing hemp since honing the psychotropic effects are a main goal of production. Hemp is used to produce goods and CBD oil while cannabis is used to produce a recreational high and to deliver certain medical benefits such as pain relief and anti-nausea effects.
Depending on your state of residence, you may be able to openly grow marijuana for your personal use and as a cash crop. These efforts are not legal on the federal level, but currently, the US government’s policy is to defer to state law and not seek enforcement of the federal law. Following the law means keeping current with your state’s regulations, which should be spelled out on your state’s official government website.
Hemp is legal to grow in the United States, but you will need a permit to grow it. Fees and regulations vary by state, but once you are licensed, you can begin raising hemp in the next growing season. You may not simply buy seed or seedlings and put them in the ground without filing the proper paperwork, however.
Hemp may soon become a major crop for U.S. farmers. In some states, cannabis is already a profitable crop endeavor. Once the federal government legalizes cannabis, which seems inevitable at some point, you can expect to see it as a row crop in many parts of the country.
Cannabis Sales, Processing, and Distribution
The sale, processing, and distribution of cannabis are heavily regulated in States that it’s allowed. Some Cities in legal states may ban cannabis business actives all together or may only allow the sale of cannabis but not the cultivation (or vice versa). Before entering the cannabis industry, its important to become familiarized with your State and local cannabis business requirements, including the allowed (and banned) activities, licensing, and property requirements.
So, How Do You Know if You Can Use Your Property for Cannabis or Hemp Use?
- Check State Laws: Just because hemp is legal on a Federal level doesn’t mean that your State allows hemp business activities, check with your State government for requirement. As for cannabis, if you are in a State that allows cannabis business activities, check with the State regulator for requirements for operating a cannabis business. Generally, you want to find out the following:
- Licensee Requirements—Some State have restrictions on who can apply to operate or own a cannabis business.
- Allowed Activities—Some States have restrictions on business actives such as: Outdoor cultivation, brokering cannabis, cannabis transportation across county lines, production of cannabis infused candies and more.
- Licensing Requirements and Fees—Find out all the requirements to apply for a license, over all process, timeframes and of course, the FEES.
- Check Local (City & County) Requirements—Local governments may also develop their own rules on cannabis and hemp business activities and have their own licensing requirements that you may need to meet in ADDITION to the States requirements. The best place to start would be the local Economic & Development department/ office (wherever they issue business licenses or building permits). Find out:
- Allowed Activities;
- License Requirements; and
- Property Requirements/Restrictions—Each business activity will generally have specific property requirements, such as zoning, required setbacks (required number feet away from schools, churches, and residential dwellings, etc.), and security requirements. Some cities, such as Los Angeles and San Francisco have developed specific areas specifically for cannabis, commonly referred to as “Green Zones”
These are just some requirements, those interested in entering the cannabis & hemp industry are urged to do their due diligence beforehand.
To find cannabis and hemp properties or existing businesses for sale, visit 420Property.com.
Lawmakers are again attempting to clear a legal path for the cannabis industry. New legislation, called the SAFE Banking Act, is making its way through Congress. If passed, it will give marijuana and hemp businesses some of the legitimacy they so desperately need to be competitive and successful.
What is the SAFE Banking Act?
H.R. 1595 is the Secure and Fair Enforcement (SAFE) Banking Act that may give the cannabis industry a seat at the table with Big Business. It’s a bipartisan bill initially sponsored by Colorado Representative Ed Perlmutter and Washington Representative Denny Heck. But it has the supportive sponsorship of more than one-third of the House of Representatives. At last count, the bipartisanship only included 13 Republicans.
Currently, banks may be criminally prosecuted for dealing with marijuana growers and dispensaries. This is because the federal Controlled Substances Act categorizes cannabis as an illegal Schedule 1 drug. Marijuana is legal in 33 states and the District of Colombia – predominantly for medical purposes. However, 10 states and D.C. also permit recreational use. These states license and regulate legal cannabis businesses. Yet, banks steer clear of these legitimate operations due to federal law.
This bill removes the legal restrictions that prevent banks from doing business with cannabis-related operations. Federal financial regulators would no longer be able to take adverse actions against financial institutions that provide services to cannabis-related businesses operating in compliance with their individual state laws. This includes terminating the bank’s share insurance or deposit insurance. With the backing of federal law, financial institutions will be able to provide legitimate banking services to businesses in the marijuana and hemp industry.
Is the SAFE Banking Act Law Yet?
The Act is not yet law. And in fact, there’s no guarantee that it ever will be. Skopos Labs – an automated predictive intelligence agency — estimates that it has a 29% chance of passing Congressional approval to become law.
The legislation started in committee in the U.S. House of Representatives. The House Financial Services Committee voted 45 to 15 in favor of the bill on March 28, 2019. Next steps will be consideration and a vote by the full House of Representatives. The Senate is expected to introduce a companion bill. Both chambers must vote in favor of the legislation, and the President will then need to sign it before the SAFE Banking Act can become law.
Some Representatives are skeptical of the bill. NC Representative Patrick McHenry has called for more investigation into the impact the law will have. Previous bills of a similar nature have failed. A 2014 appropriations bill included an amendment that addressed this issue, but H.R. 5016 met opposition in the Senate. In 2017, S. 1152 and H.R. 2215, also called SAFE Banking Acts, stalled in committee.
That this most recent legislation, H.R. 1595, has successfully moved out of committee is a positive step forward. Plus, a February hearing on the matter, the first of its kind, demonstrated a renewed interest in removing cannabis banking restrictions. Morgan Fox of the National Cannabis Industry Association expressed optimism about the future of the bill. He noted that the February congressional hearing was very positive.
Many organizations are vocally supportive of the law. They include:
- American Bankers Association (ABA)
- Credit Union National Association
- Independent Community Bankers of America
- Electronic Transactions Associations
- National Cannabis Industry Association (NCIA)
- Mid-Size Bank Coalition of America
- Real Estate Roundtable
- American Land Title
- American Property Casualty Insurance Association
Hopes are high in both the cannabis and the banking industries.
What the SAFE Banking Act Offers the Cannabis Industry
Cannabis cultivators and businesses have been operating on a cash-only basis. Even though, it’s a multi-billion-dollar industry. This leaves them vulnerable to theft and other dangerous crimes. Employing secure cash handling and storage measures is dangerous and costly.
Basic business practices that are available to other legitimate operations have been denied to the cannabis industry. These include POS systems, credit card processing, payroll services, and property rentals. Even paying taxes is burdensome without the use of traditional banking services. Some vital banking operations that will be available to the cannabis industry with passage of the new law include the following:
- Authorizing payments
- Processing transactions
- Financial transfers
- Payment collection
- Clearing transactions
- Extension of credit
- Payment cards
- Check processing
- Deposit accounts
Financial institutions can establish relationships with legal cannabis growers, manufacturers, distributors and other related operators and third-party vendors. It will also open the door for multiple financial industries.
These changes will give businesses in the cannabis industry far more growth opportunities. Access to credit and loans will support expansion and competitiveness. Customers can use a variety of payment methods, which will undoubtedly increase sales. Payroll services will aid in attracting quality workers and employee satisfaction and retention. These positive factors have shown to help businesses be more successful. Additionally, with the dangers of cash-only operations removed, crime rates will decrease, and transparency will increase.
These changes will also help level the playing field on an international basis. Canada has leapfrogged over the U.S. in cannabis production and sales. This is largely due to legal restrictions in the U.S. that don’t exist in Canada. Listings, stock trading, marketing, and real estate transactions are a few of the areas that may also benefit from the SAFE Banking Act. Legal protections, legitimacy, lower risk, and transparency will all work together to make an investment in the cannabis industry attractive, lucrative, and smart business, overall.
Want Information on Cannabis & Hemp Banking Solutions? CLICK HERE!
As more states legalize cannabis for medicinal and recreational use, investors have started to look for ways to earn money from the industry. In many cases, entrepreneurs and investors don’t have to start their own cannabis farms and dispensaries. Instead, they can find a cannabis business for sale, buy the company, and start making money.
The rush to invest in cannabis also applies to entrepreneurs that want to grow and sell hemp. Now that the 2018 Farm Bill has gone into effect, hemp businesses can operate in every state as long as their plants contain no more than 0.03% THC..
Small Marijuana Businesses Often Sell to Larger Corporations
Before California legalized cannabis, most of the illegal marijuana grown in the United States came from small farms in the Emerald Triangle. The Emerald Triangle is an area of Northern California that includes Humboldt, Mendocino, and Trinity Counties.
Small farms in the Emerald Triangle could grow marijuana illegally because the densely forested mountains gave them cover from the Drug Enforcement Agency (DEA). In fact, many of the early farms were started by people who wanted to live independently in an off-the-grid environment. The mountain’s cool temperatures and fertile soil also gave them the resources needed for cannabis to flourish.
Since California legalized marijuana for medicinal and recreational uses, some of the small farms have continued to operate independently. Many of those farms, however, cannot compete with larger operations that have enough funding to invest in more efficient growing practices, connect with dispensaries, and pay state taxes.
As a result, many small farmers want to sell their operations. The number of marijuana businesses for sale in the area makes it possible for new investors to enter the market and start earning money immediately.
Consolidating Cannabis Growing Farms
In Washington, another state that has legalized recreational cannabis, consolidation has made it possible for investors to reap rewards quickly.
From January to September of 2017, the 10 largest farms in Washington produced 16.79% of the state’s cannabis. The 500 smallest cannabis farms in the state produced a combined 13.12%.
Investors should keep in mind that not all cannabis farms look like traditional farms. Many of the farms grow a wide variety of strains indoors. Indoor farming gives owners more control over the amount of sunlight, water, and nutrients that plants receive. Since some customers prefer consuming cannabis flowers that were grown outdoors, taking a dual approach can help investors satisfy various demands in the recreational cannabis market.
This creates a remarkable opportunity for entrepreneurs that want to maximize their cannabis business’s potential by consolidating small farms into larger operations. Investors can earn money from small farms that grow marijuana and hemp, but consolidation makes it easier to increase a business’s market share and profits. Consolidation also makes it possible to introduce a wider variety of products consumers.
Buying Cannabis Dispensaries That Thrive
Not all entrepreneurs want to continue specific businesses in the cannabis industry. Instead, they prefer to develop the framework for dispensaries that appeal to consumers and compete well with other business.
Finding a marijuana dispensary for sale means that investors can profit from the experience of entrepreneurs that have worked in the industry for years. When evaluating opportunities, investors should consider the dispensary’s popularity, connections to cannabis farmers, past and current profits, and growth potential.
In some cases, it makes sense to purchase a marijuana dispensary in a city and state that already has plenty of legal cannabis stores. Colorado, for example, makes it relatively easy for recreational cannabis dispensaries to serve clients. The state hasn’t over-regulated the industry, so investors have more freedom to run their businesses as they see fit.
Colorado also has a growing cannabis tourism industry that makes it possible for several dispensaries to thrive in the same area. Thanks in part to cannabis tourism, marijuana sales in Colorado grew by 51% from 2014 to 2018. Other states have experienced similar growth from tourists that want to try cannabis.
Buying a Successful Marijuana Business
Despite the increasing number of states that let dispensaries sell cannabis legally, the federal government still considers the plant illegal. Hemp legalization has helped investors find new, successful ways to earn money. Federal prohibition, however, builds walls between investors and marijuana businesses.
Securing the funds needed to start a successful cannabis business remains difficult for some because many lenders don’t want to work with the industry. Some lenders worry that the federal government will target them for participating in illegal businesses. Others worry that the industry’s legal limbo makes cannabis too risky.
Investors and entrepreneurs may also find it difficult to secure insurance for their farms and dispensaries.
A marijuana business for sale that already earns steady profits, however, lowers the risk that investors must accept when entering the cannabis industry. If a dispensary already makes money, then its owners have found ways to navigate cannabis’s complicated legality. Starting a new cannabis business takes a lot of time and money because it forces investors to learn about complex regulations and find other companies willing to work with it.
Instead of starting new businesses, it makes sense for entrepreneurs to buy existing cannabis businesses for sale. As long as investors scrutinize their options, they stand to make a lot of money from this growing industry.
Search for existing marijuana and hemp businesses for sale at 420Property.com
The 2018 Farm Bill is expected to shake things up in the hemp industry. This new legislation gives U.S. farmers the opportunity to legally cultivate the Cannabis sativa L plant for hemp production. And manufacturers and retailers can now process and sell products derived from hemp. But hemp-based goods have already made their way into the American consumer market. CBD oil, derived from agricultural hemp, is extremely popular, and the demand is growing. Many consumers may assume hemp and goods made from this plant are a new phenomenon. However, hemp production is ancient – dating back to around 8,000 BC.
A Short History of Hemp Use
The oldest example of hemp use, to date, was discovered in Asian pottery and as food, in what is now China and Taiwan. The people of those regions used hemp cords, seeds and oil. Other evidence of hemp-derived goods has been found in India, southern Russia, Germany, Greece, Britain, and again in China, dating between 2,000 BC and 100 BC.
By 900 AD, Arabs were using hemp to make paper, and in the mid 1500’s cannabis farming made its way to South American. North American settlers started growing hemp by 1616. In the 1700’s, many colonial farmers were legally mandated to cultivate hemp. Up until the late 1800’s, between 75 and 90 percent of all the paper produced around the world was derived from hemp fiber.
Making paper was the most popular use for hemp in the past. But it had many other purposes as well. Those include providing durable fiber for rope, fabric and textiles, seed for lamp fuel, and oil for medicines and hygiene products. In the Colonies, farmers were even permitted to pay their taxes with hemp.
Hemp fiber was well-suited for ship sail canvas and cordage, helping to fuel demand for the crop. But as steam ships took over in the late 1800’s, the need for the fiber began diminishing. Additionally, cotton was easier to cultivate and process. Then, in 1917, George W. Schlichten introduced a machine that could separate useful hemp fibers from the plant. This decorticator machine had the potential to make hemp harvesting much more efficient and economical, and less labor-intensive. This is perhaps why synthetic textile industrialists started a campaign to get rid of hemp farming.
In September 1937, they obtained their goal with the passage of the Marijuana Tax Act. This law made hemp cultivation too expensive for farmers to pursue. Hemp did experience a brief resurgence during World War II with the “Hemp for Victory” government effort. Farmers were given special permits and encouraged to cultivate hemp to make rope for the Navy. But once the war was over, hemp was essentially prohibited once again. But today, that’s all changing as hemp-derived products are experiencing a renaissance of usefulness.
Thousands of Current Uses for Hemp Today
Every part of the hemp plant is viable for productive use. The following products are but a sampling of the thousands of hemp goods available to consumers today.
The anti-inflammatory properties of hemp roots make them suitable for therapeutic purposes. Some popular uses include the treatment of:
- joint pain
Hemp roots are also helpful in cleaning soils and stabilizing soil structure. They draw heavy-metal impurities out of contaminated soil.
The seeds of this plant contain an abundance of minerals, amino acids, proteins and fats. They are used in baking and cooking, and they make a healthy addition to salads, soups and smoothies. One entrepreneurial company is even bottling hemp-infused wine.
Beauty and Hygiene
Cold pressing the seeds can produce cannabis oil to be used in food, beauty products and cosmetics. Soaps, shampoos, lip balms, lotions, and essential oils are just a few of the hundreds of beauty and body products manufacturers are producing from hemp.
Hemp fiber is used to make numerous textile products, such as:
Because an increasing segment of the population is embracing eco-friendly products, hemp apparel has the potential to really take off in the clothing industry. Hemp is a sustainable crop and lends itself to organic farming. It also requires far less water than cotton crops but delivers almost twice as much fiber yield per acre. Hemp-derived fabric also enjoys many attractive characteristics. it’s odor-resistant, hypoallergenic, moisture wicking, and anti-microbial.
Hemp plastic is strong and made to last. It’s used to make pens, sunglasses, furniture, musical instruments, auto door panels, and other items that were once only made of traditional plastic or fiberglass.
Sustainability, durability, efficiency and the rapid growth rate of hemp plants makes hemp paper a more attractive option than tree paper.
Hemp fibers subjected to thermoset compression molding can create car panels and other vehicle parts.
Hemp seeds can be used in pet food and as a dietary supplement for animals. Hemp chew toys are strong enough to give most dogs a lot of play. Bedding, leashes, and collars are a few other hemp-derived pet products.
CBD oil is currently getting the most buzz as a hemp product. Manufacturers and retailers are adding CBD oil to everything from food and beverages to supplements, lotions and wellness products.
This list barely scratch the surface of the number and variety of hemp-derived goods available on the market today. In 2015, the U.S. hemp market size represented 599.6 million dollars. By the end of 2018, the estimate is approximately 2 billion dollars. Hemp has thousands of uses, and consumers are buying these useful hemp-derived goods.
Hemp’s Bright Future in the U.S.
There is a clear and strong demand for hemp products. Farmers understand this and they’re moving to start meeting that demand. Limited seed supply will be an initial roadblock. But this will eventually be overcome as U.S. farmers expand hemp acreage to produce their own growing supply.
More companies and investors are sure to move into this space, which will help the industry grow. Banking and insurance services will become available. And the demand for commercial real estate and land is expected to increase, as well. The need for heavy farm-equipment for hemp harvesting should increase, along with manufacturing equipment for hemp product production. Even marketing firms can expect to benefit. The hemp boom is set to impact a lot of industries.
The present state of the hemp industry around the world is tremendous. Now it’s time for U.S. entrepreneurs to take a bite out of this beautiful plant. The wave has already started, but it’s growing. Farmers, manufactures, retailers, startups, real estate professionals, lenders and various other professionals are poised to make a profit from this burgeoning industry.