Cannabis legalization seems to be a hot topic lately. Many people are starting to reject the stigma that cannabis once had and are embracing the plant. As a result, the industry continues to grow despite some major challenges beginning to affect businesses in this space. Several factors are contributing to cannabis businesses struggling to succeed and thrive which include things such as federal illegality, banking restrictions, lack of insurance coverage, and more. If these cannabis businesses want to continue thriving, they will need help from the government. This article will highlight some of the biggest challenges facing cannabis businesses today.
The federal illegality of cannabis
During the process of cannabis legalization, public polls are conducted to determine how many people in society are in favor of legalization. In America, polls revealed that two-thirds of citizens support the legalization of cannabis for adult use and the state-by-state reveals that the majority support legalization in every single state. Despite what the majority wants, only 18 states have passed laws to regulate and legalize cannabis. Arizona, Montana, South Dakota, and New Jersey are states that have recently legalized marijuana. Not all states have the same laws regarding cannabis, some states have legalized cannabis for recreational use while other states have only legalized cannabis for medical use. The control substance act of 1970 classed cannabis as a schedule 1 drug which stated that under federal law, possessing, using, buying, and selling cannabis was illegal in the US. Today, cannabis is still illegal on the federal level, however, this hasn’t stopped sites like Grasscity from being successful by selling cannabis accessories. This hasn’t stopped businesses from growing rapidly despite facing many challenges.
Banking and financial services for cannabis businesses
Cannabis can legally be sold In 36 US states however this substance is still illegal according to federal law. This has resulted in banks not embracing cannabis businesses and they won’t service the industry because they don’t want to fall afoul of any money laundering laws. Cannabis dispensaries, unfortunately, cannot use any services that banks provide such as direct deposits, credit card transactions, and checks. The reason is that financial institutions could potentially lose their license or charter if they accept any money tied to marijuana. This has a negative impact on cannabis businesses and causes massive inconvenience because they cannot receive loans or accept credit card payments to name a few.
Access to insurance, loans, and other resources
Insurance, loans, and other typical resources are generally available to traditional businesses however, cannabis-based businesses are not that lucky. Again, this can be linked to the federal laws against cannabis. Many new business owners go to banks to get loans to start their business and unfortunately, business owners in the cannabis industry now have to find an alternative source for loans. Insurance is also something very important for any business in this day and age and cannabis businesses cannot have insurance which is a potential risk and if something goes wrong, owners will have to pay out of pocket.
Lack of understanding about the industry from the public at large
Cannabis has been illegal for a very long time and throughout those decades, a lot of stigmas and negative perceptions have been created and accepted about cannabis. Even though there is development and progress in the realms of legalization, there are still many people in society who view cannabis through stigmatized lenses. There has been so much research and studies done on cannabis, especially medical marijuana and all the findings have been positive. For the most part, people are starting to embrace marijuana more and the misunderstanding about the plant has been cleared, however, there are still a few stubborn individuals who cannot see beyond their perception. Businesses will have to be strategic with their marketing strategy to ensure that they relay to the public all the benefits that cannabis has medically. It would also be wise for cannabis businesses to focus on their niche only and not give too much attention to people who are not interested in cannabis. The best way for businesses to fight this stigma and lack of understanding surrounding cannabis is to simply educate their audience and share as much information as possible through platforms such as social media or a website/blog.