Raising money to fund one’s cannabis startup is a big challenge. Finding investors for any startup can be difficult, but the challenges are compounded in the cannabis industry due to federal illegality. We know, because we hear from entrepreneurs looking for capital on an almost daily basis. New Cannabis Ventures doesn’t provide funding, and we are not able to solicit investment on behalf of companies legally, so we typically refer those inquiring to a handful of companies that are focused on raising capital.
One Colorado company, Green Farms Consulting and Green Farms Holdings, tried a novel fundraising approach last summer by advertising an investment opportunity for accredited investors on Craigslist, seeking $1mm. This week, the Colorado Department of Regulatory Agencies issued the company a cease and desist order, as Green Farms had failed to properly register the securities and wasn’t legally permitted to solicit because the person representing the company isn’t licensed.
Before raising capital, companies should hire an attorney that is familiar with the federal and state securities laws. Investors should likely avoid sites like Craigslist as a source of deals too!
Read Monica Mendoza’s “Marijuana business ordered to stop selling unregistered securities”: http://www.bizjournals.com/denver/news/2017/03/09/marijuana-business-ordered-to-stop-selling.html