Getting in on the Ground Floor of Cannabis Investment
Friends often tell me they want to invest in the cannabis industry but feel it’s too late or they want to participate but they don’t think they have the means. Instead of giving financial advice, I tend to just put things into perspective and tell a true story about a small tech startup and the power of private equity:
Dropbox was a scrappy tech startup in 2007. When the founders of the file-sharing company raised $1.2 million from a venture capital firm, shares were valued at just two cents.
Today, 11 years later, Dropbox has been valued as high as $12 billion, and in its first day of public trading in March 2018, the stock opened at $29 per share. Had I invested $500 in Dropbox back in 2007, my shares would now be worth roughly half a million dollars. But I can’t beat myself up. At the time I was legally prohibited due to SEC regulations from investing in Dropbox, Facebook, Amazon, and other promising startups—and you probably were too.
But things are different now.
How Regulation A+ Democratized Investing
Before 2015, you weren’t legally allowed to invest in private equity unless you were an accredited investor, which is a person or business with more than $200,000 in annual income or $1 million in assets. This rule was designed to protect investors but what it also did was shut out these opportunities to nearly all everyday Americans who just happen to have a lower net worth.
Federal legislation established in 2012, the Jumpstart Our Business Startups Act, or JOBS Act, was designed to fix this inequity and required the U.S. Securities and Exchange Commission to create new guidelines. Enter Regulation A+ (a.k.a. Reg A+): a set of rules instituted by the SEC in 2015 to make it easier for small businesses to crowdsource investments and give all Americans—regardless of their individual net worth—the chance to get in on the ground floor of large-scale, early-stage investment opportunities.
If Green is the New Gold, Cannabis is the New Tech
Many who missed out on the tech boom are now looking to the burgeoning international cannabis economy. Regulation A+ offerings have been a boon for everyday people who want to invest in cannabis, as well as marijuana businesses in need of startup or growth capital.
Because cannabis is still illegal at the federal level in the U.S., traditional institutional investors such as big banks and venture capital firms are wary of the risks involved—and, as with any investment, there are risks. That said, Reg. A+ offerings are closely monitored by the SEC, which regulates America’s securities industry and stock exchanges.
Several cannabis companies have already issued offerings to the general public with great success:
- HighTimes Holding Corp. (parent company of High Times magazine, The Cannabis Cup and others) issued its own Regulation A+ offering in 2018 with a goal of raising $50 million. The offering gave people the chance to purchase shares in the company with an accessible investment minimum of $99.
- Canadian company True Leaf Medicine International Ltd., which makes cannabis products for people and pets, raised $10 million (CAD) via a Regulation A+ offering.
- Cannabis lifestyle brand Jane West launched an equity fundraising campaign on crowdfunding investment platform Republic that gave individual investors the chance to own equity in the company for as little as $25. With a goal of $25,000, the campaign closed at $187,017—748 percent above what the company originally set out to raise.
Med-X, Inc. Regulation A+ Offering Opens Up More Cannabis Investment Opportunities
This brings us to Med-X, a green technology manufacturing company that has spent the past decade developing multiple successful verticals in the mainstream health and cannabis sectors, including all-natural, environmentally conscious products for pest control, aromatherapy, pain management, and cannabis cultivation. In addition, Med-X is expanding its digital media platform, The Marijuana Times (where I serve as Editor-in-Chief) and developing new cannabis-related products. Med-X has a Live Regulation A+ offering on the StartEngine platform, with a minimum investment of $420. So far our Reg A+ Title IV offering has over 1,800 investors and has raised nearly four million dollars and going.
As with any Regulation A+ offering, we’ve been thoroughly vetted by the SEC.
This is the future of investing. Our group and many others like the companies listed above are paving the way for other cannabis companies to use the power of the crowd to raise capital and get people involved.
Our investors have the opportunity to directly participate in building a diverse set of cannabis businesses deeply rooted in sustainability, with a detailed vision for expansion and growth. Our management team has intentions to one day offer our investors liquidity by tokenizing the securities or entering a public exchange. Joining the Med-X family is a rare opportunity to get in early just like the VC’s did back in 2007 and become a part of a rising cannabis industry that is revolutionizing our economy.
Nick Phillips is the Editor-in-Chief of The Marijuana Times, a digital magazine whose parent company is Med-X, Inc., a leading green technology firm seeking to advance the medical and adult-use cannabis industries by educating the community and developing products that are safe, effective, and affordable.
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