Hurdles For Weed Investors

While 21 states now have medical marijuana laws on the books,the substance is still illegal in the federal government’s eyes. And it’s therefore up to state and local governments to regulate, said Craig Ellins, CEO of GrowBOX Sciences, a firm that manufacturers a household marijuana cultivation system.

“Have you ever been to a city council meeting?” Ellins quipped. “It’s five people in front of you that you would not employ.”

Another issue with the marijuana industry is the lack of access to banking services. Dispensary owners can’t deposit their money in federally-insured banks, since those profits are considered illegal, even if they were earned in a state that considers them lawful.

The Obama administration has also recently issued some guidelines to banks about how to deal with customers in Colorado and Washington, where marijuana sales for recreational use are now legal. But Doug Praw, a Los Angeles lawyer who advises investors on the cannabis industry, said that some marijuana companies may choose to do business with state chartered banks that are not insured by the FDIC.

As for where exactly to invest, the panelists urged caution. “Do your research, find out who crosses their t’s and dots their i’s,” Denkin said.

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