The legalization of cannabis in Canada in October 2018 has led to the billion-dollar cannabis industry. Starting a legal cannabis business isn’t without obstacles. The laws and regulations surrounding cannabis are constantly evolving, and business owners must keep up with them. You can pursue many cannabis-related businesses, including cultivation, retail dispensaries, and infused CBD products.
Even though the cannabis industry is legal, many financial institutions consider cannabis companies high-risk. Small businesses can find private financing through angel investors and professional investors. It may be a good idea to start with a small inventory and grow as you save up the funding. There’s always the option of saving the capital on your own and avoiding any financial obligations to a bank. Depending on the size of the business, it may be possible to get personal loans from banks with good credit and proof of income.
Consider an Online Business Loan
Big banks aren’t keen on funding cannabis business owners; however, online lenders, credit unions, and smaller banks may have the right financial solutions. The Canadian banking system features both traditional financial institutions and online banks. Digital banking is growing in popularity with Canadians. Unlike brick-and-mortar banks, online banks offer all of their financial services online.
Customers enjoy 24/7 access to their bank accounts, unmatched convenience, security, and mobile banking. Online banks can offer high-interest savings accounts and account with no monthly fees. Online bank accounts are as versatile as traditional bank accounts. Canadians can open a chequing account or savings account, get credit cards and debit cards, apply for a mortgage, and take advantage of investment banking.
The personal finance website Wealth Rocket offers its pick of the best online banks. The top banks include Tangerine, Simplii Financial, EQ Bank, Wealthsimple Cash, Scotiabank, BMO Online, TD Bank, CIBC, RBC, Alterna Bank, and Outlook Financial. When choosing the best bank in Canada, it’s essential to consider your financial goals, examine your financial needs, and read consumer reviews.
Consider the Start-Up Costs
The cannabis industry is still young and evolving, and as a business owner, you must consider the risk before jumping in. It costs a lot of time and resources to get a cannabis business started. Each province and territory has specific laws and regulations that determine all aspects of a cannabis business. This includes how cannabis is sold, where retailers and dispensaries can be located, how stores operate, the minimum age and individual possession limits for customers, requirements for cultivation, and rules about the transportation of cannabis products.
Each type of business has varying start-up costs depending on where you operate, the provincial and local laws, and other factors. You’ll need to budget for permits and licenses, security, inventory, equipment, and business insurance.
Cannabis operations face a lot of obstacles despite legalization. Just like it’s hard to find a big bank that will provide funding, not all insurance carriers are willing to risk providing insurance coverage. Different cannabis-related businesses have different insurance needs. To meet the coverage needs of cannabis businesses, insurance companies combine a range of different coverage options.
GreenWrap Insurance Solutions has years of experience providing cannabis insurance to meet the specific needs of the legal cannabis industry. The insurance company insures growers, consultants, seedmen, transport, retail, dispensary, and more. They offer a range of insurance coverage options including general liability, professional liability, product liability, property damage, and other insurance products.
The legal cannabis industry shows no signs of stopping, and starting a cannabis operation can be very lucrative. It’s a risky industry, and finding funding through traditional financial institutions isn’t easy. Be realistic about your ability to raise capital and be willing to start small and grow as funding becomes available.