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Cannabis In Your Retirement Account – Episode 179

Cannabis in Your Retirement Account podcast

IRA Financial’s Adam Bergman discusses whether or not you can invest in cannabis in your retirement account.

A hot button topic of late is the legalization of cannabis (or marijuana). While it’s not been legalized on a federal level as of yet, more and more states are in fact legalizing it. They see it as a way to control crime and also a way of making money. Further, possessing very small amounts of cannabis is no longer a crime in many states. But what about investing in cannabis businesses using retirement funds?

Cannabis in Your Retirement Account

Self-Directed IRA and 401(k) plans allow you to hold alternative investments in your retirement account. The more popular types are real estate, precious metals and businesses. But what if you wanted to invest in cannabis in your retirement account? As with many alternative investments, the answer is not black or white. This is definitely a grey area.

As per the IRS rules, there are only three types of investments that are not allowed to be held in your retirement account. Number one is life insurance (though it may be held in a 401(k) plan). Next is collectibles, which include things like artwork, antiques and certain coins. Finally, any investment involving a disqualified person is not allowed. Therefore, by rule, you are technically allowed to hold cannabis-related assets with the exception of CBD.

However, most financial institutions won’t allow you to hold cannabis in your retirement account. In fact, you can’t hold cannabis assets with an IRA Financial Trust Self-Directed IRA but you can hold CBD. This is because IRAFT is regulated by the South Dakota Division of Banking, which does not allow the custody of cannabis stocks but you can invest in CBD in your IRA. You’ll find a hard time investing in cannabis with any IRA.

Using a Solo 401(k)

If you can’t use an IRA to invest in cannabis, that leaves you with one option: the Solo 401(k). First and foremost, you need to have self-employment income to even open a Solo 401(k). So long as you satisfy the requirements AND find a financial institution that allows it, you can certainly invest in cannabis-related assets. The reason being is that 401(k) plans are not regulated as sternly as IRAs. So long as the plan allows it, you can generally invest in anything you want.

Since there are no public cannabis stocks in the US, you, again, have a choice to make. First, you can invest in public companies overseas or especially, in Canada. The alternative is the private sector in the US. You can make a loan to a private cannabis company or even invest equity in one. However, it’s a difficult investment to make using retirement funds.


We here at IRA Financial are not condoning investing in cannabis, or any other “grey area” asset. We are not financial advisers and are not telling you to invest in cannabis. We’re simply here to inform you if an investment is allowed by the IRS. If you have any questions about this podcast, please check out our contact page. Be sure to check out SoundCloud for all 179 of the Adam Bergman Talks podcast!


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