Marijuana Businesses Are Seeking Investors for Expansion Projects

Although investors are becoming more active in the marijuana industry, businesses still need deep pockets to maintain operations and state compliance. Some types of businesses in the industry struggle a little more for funding than others.

“The funding needs in this industry are strong, as there’s a huge influx of startups each year,” the Marijuana Business Factbook 2017 mentions.

Breakdown of funding need by business type:

• Testing Labs – 60% looking now, 20% expect to seek funding later this year
• Infused Product Manufacturers – 40% looking now, 15% will seek funding later this year
• Wholesale Cultivators – 39% looking now, 11% plan to seek funding this year
• Tech & Product Companies – 35% looking now, 13% plant to seek funding this year
• Dispensaries and Rec Shops – 39% looking now, 5% to look for funding later in 2017
• Ancillary Services Firms – 18% looking now, 6% will seek funding later this year

The Factbook also says, “Many existing companies are looking to expand locally and even across state borders as the industry evolves, which often requires a cash infusion.”

A multitude of factors play a role in a type of business requiring additional funding. In some cases, more supply than local demand is often a factor.

For cultivators, much of it comes down to efficiency, as the Factbook states: “Turning a profit comes down to a cultivator’s ability to produce high-quality products with an extreme level of efficiency, but the costs of building a facility to meet these needs are substantial. Many growers are also switching to or incorporating greenhouses and therefore need a substantial investment at the outset.”