October 1, 2014
As discussed yesterday, there is the potential for opportunity in the edibles market (the use of marijuana in food products) though there are many uncertainties that still need to be cleared up on both a state and federal level. Beyond that though, many ‘edibles’ entrepreneurs face another challenge that typical food entrepreneurs don’t run into.
While the House of Representatives voted in July of this year to loosen the restrictions that keep banks from lending to or working with edibles businesses, the banks themselves are still tentative about the idea of allowing marijuana businesses onto their rosters – in the form of either lending to them or by allowing them to open business bank accounts, because of the federal governance they are faced with and the fact that pot is still not allowed by the federal government. This is an issue that even businesses who are legally operating within states that have already sanctioned pot.
To date, this means many edibles businesses must operate in a cash-only mode which makes it tough, it not impossible, to build business credit, finance growth, and ensure that all records are appropriately managed for tax and legal reasons. Will we see further change in the future? Some guess yes that as public opinion about pot continues to swing to the positive, those businesses who operate within its landscape will see a loosening up on banking regulations that will make it easier for them to find bank or credit unions to work with. Until then though this can be one of those challenges that catch edibles entrepreneurs unawares initially.