Funding a cannabis startup in Switzerland

TL;DR

• Traditional Swiss banks avoid cannabis (reputational & compliance risk).
• Specialized funds: Casa Verde (US), Green Acre (CA), Halo Collective.
• Swiss angels: Swiss Cannabinoid Investors, some SICTIC members.
• Crowdfunding: Wemakeit, Conda, Companisto — accessible for CBD brands.

Banking reality

• Big banks (UBS, ZKB): often close cannabis accounts.
• Cantonal banks: case-by-case (industrial hemp ok, THC-adjacent no).
• Neobanks: Yapeal, Neon, Revolut Business — sometimes tolerant.
• Foreign options: multi-currency accounts via Airwallex, Wise Business.

Funding reality: banking, investors and the cash-flow route instead of venture capital

The biggest operational problem for young Swiss cannabis firms is not equity but payments. Many banks treat the sector as high risk, causing delayed account openings, terminated relationships or limited card acceptance. Before registering the company, speak to several institutions, prepare a clean compliance dossier (permits, lab analyses, supply chain, youth protection) and build a second banking relationship as redundancy.

On the capital side, classic venture capital is scarce for Swiss cannabis because exit paths are unclear and regulatory risk is hard to model. More realistic: sector business angels, Innosuisse innovation projects where there is a technology component (analytics, extraction, software), cantonal loan guarantees and convertible loans from customers or suppliers. The most pragmatic financing remains cash flow: small batches, short cycles, B2B prepayment and strict inventory discipline, because capital locked in raw material is the sector's most common cause of insolvency.

• Sort banking before incorporation – compliance dossier plus a second institution as backup.
• Innosuisse and cantonal guarantees are more realistic than venture capital.
• Inventory is locked capital: small batches beat large stockpiles.
• Run B2B on prepayment or short terms – receivable defaults are typical for the sector.

Regulatory hurdles and compliance costs

The financial planning of a cannabis startup in Switzerland is significantly determined by regulatory requirements. Depending on whether products fall within the range of THC below one percent (responsibility of the BLV and BAG) or are situated in the medical sector, official requirements vary drastically. Since August 2022, medical cannabis has been prescribable by doctors without a BAG exceptional authorisation, which opens up new market opportunities but at the same time requires high investments in compliance with quality standards such as GACP or GMP. These certifications consume substantial financial resources even before the first product can be sold.

A common mistake in budgeting is underestimating ongoing laboratory costs and licensing fees. Every batch must be tested by accredited Swiss laboratories for its exact active ingredient content and contaminants to seamlessly demonstrate compliance with legal limits. Startups must therefore plan a solid liquidity reserve for these recurring items. Anyone unable to financially reflect regulatory requirements from the outset risks the withdrawal of operating licences or costly recalls, which usually means immediate bankruptcy for young companies.

• Budget for GMP and GACP certification costs at an early stage.
• Take ongoing expenses for official permits and mandatory laboratory analyses into account.
• Create financial buffers for regulatory delays in approval procedures.
• Clear separation of budgets between the unregulated industrial hemp sector and the medical sector.

Financing of pilot trials under the BetmG

The conduct of scientific pilot trials in accordance with Article 8b of the Narcotics Act presents founders with unique financial challenges. Since these projects, such as Züri Can or Weed Care Basel, are strictly limited in time, classic startup financing geared towards long-term growth is hardly applicable. Investors must understand that the revenue models within these trials are heavily regulated and the number of participants is limited. Financing is therefore often achieved through a mix of research grants, cantonal contributions, and collaborations with academic institutions.

For private investors, these pilot projects are nevertheless attractive as they serve as a testing ground for future market models. Those who commit financially here secure valuable know-how regarding supply chains, consumer behaviour, and quality control under real-world conditions. Nevertheless, startups must comply with the strict requirements of the Federal Office of Public Health (FOPH), which restrict the commercial exploitation of the data and products obtained. The financing structure must therefore be designed flexibly enough to remain viable even after the end of the pilot trial.

• Aim for a combination of public research funding and private equity.
• Take the limited duration of the pilot trials directly into account in the amortisation calculation.
• Utilise collaborations with universities or cantons to reduce own development costs.
• Transparently declare and reinvest revenues from regulated sales within the studies.

Structuring of equity investments and convertible loans

Since institutional venture capitalists in Switzerland act cautiously regarding cannabis investments, founders are increasingly turning to alternative financing instruments. In Swiss corporate law, convertible loans in particular have established themselves as a pragmatic solution. These enable investors to quickly inject liquidity into the startup without the immediate need for a complex and expensive company valuation. The conversion of the loan into equity takes place at a later date, usually as part of a subsequent, larger financing round.

Another option is the issuance of participation certificates, which grant the investor financial rights but no voting rights. This protects founders from unwanted influence on the operational direction, which is particularly advantageous in a highly regulated industry. Regardless of the chosen instrument, precise contractual drafting is essential. Clauses for handling regulatory risks, such as the sudden ban of certain product classes or the withdrawal of licenses, must be integrated to avoid subsequent legal disputes.

• Use convertible loans to bypass lengthy valuation discussions in the early stage.
• Consider participation certificates for raising capital without diluting voting rights.
• Anchor regulatory extraordinary termination rights and risk clauses in contracts.
• Obtain professional legal counsel to ensure compliance with the Swiss Code of Obligations.

Insurability and operational risk mitigation

An often overlooked aspect in the financial planning of Swiss cannabis companies is the hedging of operational risks. Many established Swiss insurance companies categorically exclude coverage for damages related to cannabis activities or demand extremely high premiums. This affects not only property insurance for production facilities, but also product liability insurance. Without adequate insurance coverage, however, a startup is hardly viable for professional investors, as the liability risk in the event of crop failures or product liability cases is unbearable.

Founders must therefore engage specialized brokers early on to find tailored solutions on the international market or with tolerant niche insurers. The costs for these policies must be included as a fixed component in the business plan. In addition, insurers often require proof of strict security concepts, especially for the cultivation and storage of raw materials. Investments in alarm systems, vaults, and continuous video surveillance are therefore not only a legal obligation, but also a mandatory prerequisite for obtaining insurance coverage and capital.

• Obtain insurance quotes for property and liability risks before starting operations.
• Budget costs for physical security measures as part of investment planning.
• Contact international insurance brokers for hard-to-place risks.
• Actively incorporate risk analyses regarding crop failure and contamination into liquidity planning.

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