Cannabis Company Raising Capital on Craigslist Draws Regulatory Rebuke

craigslist

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

Published by Alan Brochstein, CFA

Alan Brochstein, CFABased in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV.

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