Investment/Venture Capital

In our June 12 blog post, we reported on a potential acquisition in the cannabis industry:

As an illustration of the potential difficulties in an acquisition by a SPAC, in July 2017 it was announced that the publisher of High Times was going to be acquired by a SPAC, Origo Acquisition Corp. The merger has yet to be consummated, and Origo has scheduled a stockholder meeting for June 12 looking for approval to extend the time that Origo has to close a transaction before having to dissolve.

On June 12, 2018, Origo Acquisition Corporation obtained stockholder approval to amend its corporate charter to extend its deadline to consummate an acquisition from June 12, 2018 to September 12, 2018.  Origo had previously entered into a merger agreement with Hightimes Holding Corp., the publisher of High Times Magazine.  The amendment gives Origo an additional 3 months to consummate the merger.  As a special purpose acquisition company, if Origo does not consummate the merger with Hightimes, or another qualifying acquisition by September 12, 2018, it will be forced to liquidate.

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. Continue Reading SPACs as an Exit Strategy for Cannabis Businesses

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. Continue Reading Invest in That?? What are you Smoking??

In April, we wrote about Med-X, Inc. (“Med-X”).  Med-X was the first cannabis company to launch an equity crowdfunding campaign, and as of September 16, 2016, the company has found itself in regulatory hot water for failing to adhere to securities law requirements.

Continue Reading Crowdfunding in the Cannabis Industry – Update – SEC Temporarily Suspends Med-Ex Crowdfunding Offering

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. Continue Reading November Surprise? NYSE Approves Industrial Innovative Properties’ Listing Application

 

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. Continue Reading Trick or REIT: A Marijuana-Focused Real Estate Company is Going Public, but will NYSE be on Board?

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 giant at the vanguard of a potentially lucrative new industry.

Colorado and Washington may have jumped ahead in the race to become North America’s marijuana kings, but Canada is now positioned to take a lead in the booming multibillion-dollar industry.

Denver voters may consider a ballot measure this fall to make the city the most populous place in the nation to expressly allow pot clubs.

Although Sean Parker’s controversial marijuana ballot measure is considered by some to be the great green hope in terms of bringing prohibition to an end in California later this year, many advocates for the initiative, including Lieutenant Governor Gavin Newsom, are concerned that the cavalier attitude among the public could sabotage legalization efforts for many years to come.

Something we missed that everyone needs to know?  Give us a shout in the comments.

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.  One indication of the increased activity: In 2015, cannabis companies secured more than $215 million in venture capital, according to data from the investment research firm CB Insights.

 

In a sign of marijuana’s growing normalization in Canada, two major life insurance companies have decided to treat cannabis users as non-smokers, reversing a long-standing policy and offering many of them far cheaper premiums.

 

A bill authorizing physicians to prescribe marijuana derivatives to treat a host of health conditions was signed into law this afternoon by Ohio Gov. John Kasich.

 

Something we missed that everyone needs to read?  Let us know in the comments.

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.

 

A medical marijuana legalization bill has been sent to Ohio Governor John Kasich in an effort by state lawmakers to offset support for a proposed fall ballot measure.  Gov. Kasich has not indicated whether he will sign the legislation or not.

 

Public cannabis-based companies seeking to list on a national exchange suffered a setback this week when Nasdaq rejected a listing request by MassRoots, fearing it would “aid in the use and dealing of an illegal substance.”

 

It’s not that the Teamsters are opposed to legalizing marijuana use, but they are concerned about how the transportation and distribution of the drug would be managed under the proposal that goes to the state’s voters in November.

 

Anything we missed?  Let us know in the comments.

First Canadian Marijuana Crowdfunding Platform Launched

On March 2, Ascenta Finance Corp., a licensed exempt market dealer, and KoreConX Corp., a company that specializes in crowdfunding, launched Bay Street Cannabis (“Bay Street”), Canada’s first online equity crowdfunding portal dedicated  to the cannabis sector.  Bay Street provides public and private legal cannabis and cannabis-related businesses with access to investors.  Like the U.S., Canada’s laws have recently made it possible for Canadians to purchase securities of cannabis companies.  The Canadian cannabis sector is clearly moving into the future financing, but what about the U.S.? Continue Reading The State of Crowdfunding in the Cannabis Industry