skip to Main Content
Where to Find Money to Expand Your Cultivation Business

A cultivation business may meet the criteria for expansion at home or abroad, but it’s unlikely that a young cultivation business will have the capital necessary to fund an expansion project.

Fortunately, money is much easier to find for expansion projects of successful companies than it is to fund a start-up with no license.

Raising capital to expand a cultivation business is no different from raising money in any other industry, with one exception in the US: bank loans. Since cannabis remains federally illegal, most banks are not willing to issue loans to cannabis cultivation businesses. Fortunately, there are several alternative avenues that an entrepreneur can pursue to fund a cultivation project.

Here are three of the most common:

Angel investors

Private investments are a relatively uncomplicated method of securing capital, and angel investors are a common source of private investments. Angel investors are wealthy individuals that like to invest in start-up ventures, often in exchange for an equity stake in the business. Since they invest with their own money, their personal interests usually weigh as heavily as the financials in their investment decisions. The founders’ passion, commitment, and integrity can heavily influence an angel investor’s decision to financially support a cultivation business.

Typical angel investments range from $25,000 to $100,000, but higher amounts are not uncommon. Cultivation businesses should anticipate attracting several angel investors since expansion projects can require millions of dollars to build and operate.

Entrepreneurs can find angel investors by attending events where cannabis companies pitch their businesses to interested investors. Benzinga (benzinga.com) is a hub for investing information across multiple industries, and they’re a leading source of information for the cannabis capital markets. Besides news and investor education, they also host cannabis investment conferences throughout the year. Their events pair businesses seeking capital with angel investors.

ArcView (arcviewgroup.com) has been providing market research and investor match-making services for the last ten years. Their website claims that they’re the first and largest group of high-net-worth investors in the cannabis sector, with their members having invested over $270 million in more than 200 companies.

Canopy Boulder (canopyboulder.com) is a business accelerator that offers entrepreneurs resources and capital to fund promising cannabis businesses.

Venture capital firms

Like angel investors, venture capital firms invest money into cannabis businesses that exhibit a high potential for growth and a great return on investment. They differ from angel investors in that venture capital firms tend to be much more selective and prefer to invest in businesses that are both already established and have shown the ability to generate profits. For cannabis companies with an operating history of two years or less, venture capital funding is a popular—and sometimes necessary—avenue for raising capital. This is particularly the case when the company does not have access to more traditional sources of capital, such as bank loans.

Venture capital firms invest with the goal of cashing out their equity stake once the business holds an initial public offering (IPO) or is sold to a larger company. Venture capital firms may seek up to 50% equity ownership in a cultivation business, with investments that range from $2-10 million. This type of funding is often accompanied by harsh production demands and a desire to realize financial returns quickly. Make sure to partner with a trusted accounting firm and lawyer so that you understand the expectations that accompany venture capital funding.

Family offices

A family office is a privately held company that handles investment and wealth management for affluent families. These funds typically hold in excess of $100 million in investable assets, with the goal of growing and transferring their wealth across generations. Although family offices have historically relied on asset managers to perform due diligence on potential investments and entered deals as limited partners, there has been a shift in approach over the last few years.

Increasingly, larger family offices are pursuing direct investment strategies. According to Fintrx, a family office data and research company, an average of 41% of family offices invest directly into the companies in their portfolio.(1) These types of investments are more attractive than funds, as they provide greater transparency and decision-making authority and increase the family’s control over their assets. These factors appeal to entrepreneurial families and the next generation as well, who may desire to be more hands-on when it comes to overseeing their family’s finances. Additionally, direct investments can help family offices to reduce fees and expenses, where two percent management fees and twenty percent performance fees are the industry standard.(2)

Securing investment from a family office is more difficult than doing so through angel investors or venture capital firms. Since family offices tend to prefer secrecy, cultivation businesses should seek an introduction through an intermediary like an investment banker or wealth manager. Mazakali (mazakali.com) is a company that guides family offices and has a history with cannabis investments. The Fintrx website has also identified the following three family offices that have a history of investing in cannabis:

Sayano Family Office (sayano.ch)
Joban Group Family Office (jobangroup.com)
Serruya Family Office (serruyaprivateequity.com)

Although angel investors, venture capital firms, and family offices are some of the more common ways to fund cannabis expansion projects, there are other methods for acquiring money to fund a project. However, if an entrepreneur is not experienced with alternative funding sources, it’s advisable to consult an expert or hire a fundraising professional to help explain the caveats of these options and avoid a capital infusion that you later come to regret.

Family and friends

Borrowing money or accepting investments from family and friends is risky business. This type of arrangement has the potential to change the chemistry of your relationship forever. What happens if a close family member lends you money, but then needs it back? If you don’t have the buffer to cover unexpected and sudden repayments, family holidays will never be the same. If you value your friendships and family relationships, it’s best not to pursue this avenue of funding.


(1) “Part One: Mapping the Location and Assets of the Family Office Industry,” Fintrx Industry Briefing Series, 2020. 
(2) “5 Reasons Why Family Offices Are Focusing On Direct Investments,” Forbes.com, February 21, 2020. 

Ryan DouglasRyan Douglas

Ryan Douglas

Ryan Douglas helps businesses cultivate a profitable future in the cannabis industry. He is the founder of Ryan Douglas Cultivation, LLC and author of From Seed to Success: How to Launch a Great Cannabis Cultivation Business in Record TimeRyan has worked in commercial horticulture for 25 years and specializes in legal cannabis start-ups.

Before entering the cannabis industry, Ryan spent 15 years as a commercial greenhouse grower of ornamental and edible crops, growing up to 600,000 plants annually. As Master Grower from 2013 to 2016, he directed cultivation for Tweed Inc., the flagship subsidiary of Canopy Growth Corporation. Ryan now offers cultivation advisory services to cannabis operators worldwide, and he can be reached through his website, douglascultivation.com.

This Post Has 0 Comments

Leave a Reply

Your email address will not be published.

Recent Stories

French Senators Petition Macron’s Government For Urgent Cannabis Reform

OVER 30 senators from the Socialist, Ecologist and Republican group have called for the launch of a consultation process to introduce new laws to legalize cannabis in France. The co-signed letter from 31 senators, published in the Le Monde newspaper explores several options for the legalization of cannabis – and rejects the notion of decriminalization, saying…

New Jersey Marijuana Prices Expected To Drop As Market Expands

In its first 70 days of being a legal market in New Jersey, recreational marijuana collected close to $80 million in total sales, according to the latest figures. Folks involved with ramping up the industry expect that number to grow as time goes on, and for consumers to experience more options and more affordable prices…

Cilicon Partners with Vape-Jet to Offer an Intelligent & Integrated Vaporizer Solution

PRESS RELEASE Cilicon, a global provider of cannabis vape hardware, and Vape-Jet a U.S. -based infrastructure platform for cannabis oil-filling, announced today that they have formed an official partnership to provide an intelligent one-stop product solution for cannabis brands around the world. Based on a mutual understanding of the value of technology orientation for business growth…

NY’s medical marijuana patients frustrated as home-grow rules remain elusive

As the gears of the state’s rule-making process grind slowly forward, frustration and impatience best describe the feelings of New Yorkers who rely on cannabis as medicine. While the Office of Cannabis Management continues to assess the latest round of public comments on proposed rules governing personal cultivation by medical patients, a trio of such patients recently offered their experiences…

More Categories

Back To Top
×Close search
Search