Financing

Private

What private financing options are available for cannabis businesses in your jurisdiction, and what are their respective advantages and disadvantages?

The possession, use, cultivation, and distribution of cannabis with a tetrahydrocannabinol (THC) concentration greater than 0.3% is prohibited under Alabama law (Sections 13a-12-211 to 13a-12-214 of the Code of Alabama 1975).

Further, in Alabama, a person is guilty of criminal conspiracy if:

with the intent that conduct constituting an offense be performed, he agrees with one or more persons to engage in or cause the performance of such conduct, and any one or more of such persons does an overt act to effect an objective of the agreement. (Id. at Section 13A-4-3(a).)

Therefore, financing a cannabis business in Alabama would arguably constitute a criminal conspiracy.

The Agriculture Improvement Act 2018 legalized “hemp”—defined as any part of the cannabis sativa L. plant with a THC concentration of 0.3% or less—by removing it from the Controlled Substance Act’s definition of “marijuana.” However, Alabama has yet to promulgate regulations relating to hemp. Once it does so, hemp companies should be able to receive private financing. 

Public

What rules and restrictions govern cannabis businesses’ listing and admission to trading on recognised equity securities exchanges? What are the advantages and disadvantages of public listing?

The possession, use, cultivation, and distribution of cannabis with a tetrahydrocannabinol (THC) concentration greater than 0.3% is prohibited under Alabama law (Sections 13a-12-211 to 13a-12-214 of the Code of Alabama 1975).

Further, in Alabama, a person is guilty of criminal conspiracy if:

with the intent that conduct constituting an offense be performed, he agrees with one or more persons to engage in or cause the performance of such conduct, and any one or more of such persons does an overt act to effect an objective of the agreement. (Id. at Section 13A-4-3(a).)

Therefore, financing a cannabis business or listing such a business on a securities exchange in Alabama would arguably constitute a criminal conspiracy under Alabama law.

The Agriculture Improvement Act 2018 legalized “hemp”—defined as any part of the cannabis sativa L. plant with a THC concentration of 0.3% or less—by removing it from the Controlled Substance Act’s definition of “marijuana.” Although Alabama has yet to promulgate regulations relating to hemp, financing an industrial hemp business or listing such a business on a securities exchange in Alabama is unlikely to constitute a conspiracy under Alabama law, as hemp is no longer illegal.