Marijuana Business Investing: The Basics On Debt vs. Equity
Many of my firm’s cannabis clients are raising money right now. Out-of-state investors looking for a place to deploy capital are looking hard at Oregon (which recently abolished residency requirements to participate in its cannabis industry), and some are already starting to lay the groundwork for pending recreational legalization in Nevada and California. Even more established markets, like Washington and Colorado, are seeing an uptick in corporate entities trying to bring in new money. This being the case, now is as good a time as any to discuss the basics of raising money. To start at the beginning, I’ll look at a basic question: debt versus equity.
Startups are in a different position from existing businesses in determining whether to offer debt or equity. Equity, or convertible debt, is standard. Debt is generally tough to get without signing personal guarantees or taking out a home equity loan or line of credit. These are big personal risks...
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