California Cannabis: Private Investment Funds Ready, Set, GO!

December 28, 2017

The California Cannabis Gold Rush is expected to break wide open for entrepreneurs as the clock ticks down to Monday Jan 1 2018, the day when  California will become one of only eight states in the US in which recreational use of marijuana is sanctioned.  Most industry followers expect an opening of flood gates for a broad assortment of entrepreneurs purveying products and services that will leverage the much awaited legalization of recreational marijuana.  In turn, this gold rush, which is projected to turn into a $5bil per year state industry, an avalanche of opportunities has been created for private investment funds focused on the legalized marijuana sector. These private investment funds will have carte blanche in providing capital in form of equity and/or debt to cannabis startups, simply because traditional banks are barred by Federal law to be a source of capital for cannabis firms.

“..Selling cannabis in California has the potential to generate $5 billion a year, once a critical mass of businesses have proper permits, according to the Agricultural Issues Center at the University of California at Davis. Each harvested acre of cannabis could be worth millions of dollars, based on current prices in Washington, Oregon and Colorado, according to Greg James, the publisher of Marijuana Venture, a monthly business magazine…” (NYT, Dec 28, 2017-Marijuana Start-Ups, Shut Out From Banks, Turn to Private Banking)

“Throughout the year, we’ve been on the receiving end of requests from many California-based firms in need of investor offering document preparation services in advance of the new law going into effect, and the volume of inquiries is only ratcheting up” says Paul Azous, CEO of Added Azous, “Having a private placement offering prospectus that conforms with regulatory guidelines, whether within the framework of SEC Regulation D or Regulation A+ is only part of the puzzle; entrepreneurs who lack a cogent business plan and a well-constructed pro forma, along with a concise ‘investor tear sheet’ is always where the rubber meets the road when it comes to securing capital from savvy accredited investors.”

evan fisher prospectus
Evan Fisher

Evan Fisher, a business plan writing expert whose career has included roles at leading investment banks and is a member of team , stated, “Selling cannabis to consumers is easy, but as the California Cannabis space becomes crowded, selling a unique investment value proposition to folks who are providing risk capital is where many entrepreneurs find themselves dying on the vine.”