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So You Want To Start A Cannabis Business? Phone A Friend

Although legal cannabis is a multi-billion dollar industry in the U.S., many banks are still shy about working with firms that touch the plant: Many entrepreneurs end up looking for loans from friends and family, but it can be a costly alternative according to the most recent chart from Marijuana Business Daily.

According to the chart, nearly 25 percent of cannabis companies that received startup capital from friends or family members paid interest rates of 10 - 15 percent. Fifteen percent paid somewhere between 16-20 percent interest. A small number (4 percent) paid 30 percent or more on the loans to start their business.

On the positive side, more than 55 percent paid interest rates of less than 10 percent for that money - closer to the going rate of most banks.

"it seems a majority of cannabis entrepreneurs got pretty fair deals on those loans from friends and family, writes MDB columnist Becky Olson.

"That being said, cannabis remains an extremely risky business to engage in. Generally, higher costs of capital will persist until the operating climate for the industry changes significantly."


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