One of the main struggles marijuana entrepreneurs face is funding. The fact that businesses are selling a drug that's deemed illegal under federal rules makes financial institutions wary of cannabis start-ups.
But at the Marijuana Business Conference and Expo in Las Vegas last week, both traditional banks and private equity firms were warming up to the funding idea, thanks to a midterm election cycle that legalized recreational use in Alaska, Oregon and Washington, D.C. It was a sign of shifting public perception of the industry.
Tripp Keber, CEO of Denver-based Dixie Elixirs, a cannabis-infused edibles company, says accessing financial services is the industry's biggest challenge and opportunity.
"Even in a state where [recreational cannabis] is regulated like Colorado or Washington ... most businesses do not have access to traditional banking," Keber said. "I do ultimately think that states will work with the federal government to ensure businesses like mine have banking like you would in any other industry."
First Security Bank of Nevada is among the first financial institutions to step into the cannabis industry.
The bank is beginning to establish relationships with marijuana businesses under tight regulatory scrutiny within Nevada. John Sullivan, First Security's president and chief executive, says it has opened accounts for about 80 marijuana-related businesses. "The applicants hold approximately $35 million in deposits at present," Sullivan said.