Investment/Venture Capital

Seyfarth Shaw LLP has released the results of its fourth annual Real Estate Market Sentiment Survey, which polled commercial real estate executives around the country from all sectors. Of interest to our readers, this year’s survey revealed that, despite the dramatic increase in the number of states legalizing marijuana, 85% of respondents are putting the

A developing market for owners of cannabis businesses looking for a potential buyer are SPACs, special purpose acquisition companies.  SPACs raise money in public offerings with the purpose of acquiring companies, usually in a specified range of industries or located in a particular geographic area. The SPACs cannot have a particular target in mind at the time of the public offering.  Among some of the more recent SPACs with a cannabis industry focus, MTech Acquisition Corp. closed a public offering for $57.5 million in February 2018, and Cannabis Strategies Acquisition Corp. closed a CDN $134.75 million (approximately US $103.78 million) public offering in Canada in December 2017. This post looks at some of the issues involved that are unique to being acquired by a SPAC.
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There is a segment of the investment community that wants to invest in the cannabis industry in the worst way, and that is exactly how some are doing it.  Over the past several months our firm has reviewed a number of private placement memoranda (PPM) for clients, and while some appear to be solid and well written, others remind us of the early days of the internet boom when business plans were sometimes written on napkins.  Deficiencies we have found in PPMs include confusing descriptions of business plans, lack of financial projections, lack of basis for valuations, inadequate disclosure of risk factors and vague discussion of management compensation and/or equity holdings.

If you are planning to invest in a cannabis company, here are a few factors that you should consider before making a decision.
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As we reported last month, on October 17, 2016, Innovative Industrial Properties, Inc., a real estate investment trust (colloquially, a REIT) specializing in the acquisition, ownership and management of industrial properties leased to experienced, state-licensed operators of regulated medical use cannabis facilities, filed a registration statement with the United States Securities and Exchange Commission under which the company is offering up to 8.75 million shares at an initial public offering price of $20 per share.  The Company simultaneously filed to list its shares on the New York Stock Exchange.
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As election day draws near, proposed laws which would permit recreational or medical use of marijuana are on the ballot in nine states.  Riding the wave of the legalization movement–in addition to the nine states with legalization measures currently on their ballots, four states have already legalized recreational marijuana and 25 states currently permit medical use–business interests are lining up to service the potentially burgeoning cannabis industry, and one company in particular is poised to take a marijuana-related business model public and mainstream.
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Welcome back to The Week in Weed, your Friday look at the world of legalized marijuana.

Microsoft is welcoming marijuana compliance company Kind Financial onto its Azure Government cloud platform, marking a legitimizing first for the legal cannabis business while positioning the technology

Welcome back to The Week in Weed, your weekly look at all things legalized marijuana.

The cannabis industry is becoming increasingly attractive to investors, who are pumping more money than ever into marijuana companies.  

Welcome back to The Week in Weed, your weekly source for news about legalized marijuana.

He’s a medical pot advocate with arthritis.  He’s also the first Congressman to admit to marijuana use while in office.