Is there a pot bubble?

Lining up payroll services or security or lawyers or even a bank can be arduous, as many of those companies fear legal ramifications. The Colorado Bar Association recently prohibited attorneys from working with marijuana-related businesses for just this reason—which means that, for now at least, pot businesses can’t hire a lawyer to draw up a contract or close a deal. And even Privateer, with its multimillion-dollar investment deals, was turned down by 16 different banks for a simple checking account.

So far, Privateer has used the money it’s raised to invest in or set up ancillary businesses on the edges of the marijuana supply chain that do not handle the leaf, reducing the firm’s legal risk and regulatory requirements. The company established a Canadian subsidiary called Lafitte Ventures to build a 1.8-acre cultivation site in British Columbia, for example, and a similar American firm called Arbormain, planning 24 warehouses across Washington State for growing, testing and processing a range of products. Privateer also recently acquired Leafly, which is a kind of Yelp for pot, with user reviews of businesses and the products they sell.

Meanwhile, an astonishing amount of this fast-growing industry is still conducted in cash—a situation that can leave businesspeople a little jittery. “I’ve been in rooms with a million dollars,” Kennedy says. “It’s not a good feeling.” Companies have to pay for security to prevent robberies, and getting loans is a headache. “We wanted to build a farm on a piece of property where anyone with a credit score over 700 could get it,” Cooley says. “Mine is over 800, but I couldn’t get a loan. Last year, when we were jumping through hoops becoming permitted, instead of a line of credit, we stopped taking salary.”