How To Get Foreign Investment In Your Cannabis Company
Unlocking foreign investments starts with understanding the obstacles and how to overcome them.
As business grows for the legalized cannabis industry in America so can foreign investment. Yet the nuances of America’s growing cannabis industry can present obstacles that investors need to be aware of before jumping into the legalized marijuana space. It’s equally important for anyone looking to work with foreign investors to also be aware of these roadblocks. By understanding them—and the possible workarounds —you can unlock untapped investor money.
The fact that cannabis is still illegal at the federal level remains a significant stumbling block for growth and foreign investment. Essentially, foreign investors will need to engage an American cannabis business at the state level, and the illegality of cannabis at the federal level can have significant immigration and taxation complications.
All of this can be new terrain for foreign investors. Yet these obstacles should not dissuade the savvy investor. They can be navigated once you familiarize yourself with the cannabis market.
Obstacle #1: Residency requirements
One of the first obstacles for foreign investment can be the various residency requirements of each state regarding cannabis businesses. For example, Washington state requires that all cannabis business owners are residents of the state. The complexity of residency requirements also speaks to the nuances of having to comply with the various laws between states and jurisdictions. What may be acceptable in one state could be outlawed in another, so every cannabis business needs to have a local cannabis attorney well-versed in the complexities of this rapidly growing and evolving market.
Obstacle #2: Immigration requirements
Another significant hurdle for foreign investors centers on immigration requirements. Since the use or selling of cannabis is still illegal at the federal level, one’s association with a legal cannabis business either in America or abroad could result in the denial of a visa or citizenship. American immigration requires that entrants to the United States exude “good moral character,” so working in the legal marijuana market, which is still illegal at the federal level, could prevent someone from obtaining the GMC requirement. This is where having a trusted advisor who can navigate for immigration business and law comes in handy.
For example, foreign investment in a cannabis business in Washington state due to its residency requirement can be far more complicated than one would assume, and especially for Canadian investors now that Canada has legalized marijuana. Expanding a cannabis business from Vancouver to Seattle might seem like a no-brainer, but it will be far more complicated than anticipated.
Obstacle #3: Banking restrictions
As everyone in the industry knows, federal taxes and banking complications can also be a significant hurdle. American banks work across state lines, so moving legal cannabis revenue from Colorado to a state that has not legalized marijuana or outside the country could open a bank to federal penalties. As a result, marijuana businesses can be overly reliant on cash transactions. Additionally, cannabis businesses have specific taxation requirements such as ICR 280E that can be particularly onerous.
None of these obstacles are insurmountable. In fact, they all can be navigated by doing your due diligence, creating a robust business plan, and hiring a qualified cannabis attorney. Analysts expect this market to experience dynamic growth in the next couple of years, so targeting foreign and domestic investment in order to grow your business and seize this opportunity will be a wise decision in the long run. The secret to foreign investment is to ensure that you are dotting your i’s and crossing your t’s every step of the way.