Hemp and Cannabis Fundraising

Factors necessitating the fundraising.

In the recent months, the hemp and cannabis industry has experienced a rocky time in the market. Most of the growth initiatives have been paused owing to the negative regulatory variables. Other cannabis companies have experienced major layoffs of their workforces.  Most of the players in the industry have signaled the need for fundraising and clarity of the industry operations to develop their businesses. The industry need a well channeled fundraising plan and strategy to reverse the cooling trend and win the black market competition. However, raising funds for business growth is hard, consumes a lot of time and require all the industrial players to comply various state and federal laws (Newman 89). They must internalize the investment landscape to make the cannabis and hemp business smooth and easy. On the other hand, the state may need to lower their taxes on the industry by minimizing their banking and tax burdens to encourage more investors into the industry (Krawitz 47). After the senate passes the bill to protect the Hemp and Cannabis against injustices caused by drug wars from the judiciary, the companies will have a closer path to their profit margins. More investors are likely to fund the industry and take the products into global markets as more countries legalize the recreational and medical uses of cannabis and hemp.

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Fundraising strategies

Here are some of the top wins that the business stakeholders may need to consider when seeking investment. One, the business details matter must be clearly outlined from the entity type to the business capitalization structure (Bowyer 78). The investors are interested to know the agreement between the founders of the company and their specific roles in the company’s major decisions. A clear documentation of this information will greatly help to attract the outside capital. Two, knowing what you need and the reasons why you need it. A clear definition of your funding needs helps to anticipate the investor’s questions and their answers. The business must be specific on the amount of money it needs, the monthly burn rate, unit economics, financial projections and assumptions and the cost components as well.

Three, Understanding the Equity Stake and Company Valuation. The investors and business stakeholders needs a clear documentation of the company portion to be sold out and the amount of money needed for investment. While the founders of the company value the business according to their believed potential value, the investors value the business according to the current valuation methods and risk premiums that apply to startup businesses (Lane 234). Four, State regulations and federal laws, the cannabis and hemp businesses must have a clear disclosure and vetting for all the interested investors. Some of the interested investors who may want to invest in the business may not be willing to submit to state law or being identified through licenses and hence a prior briefing of the requirements will greatly help to avoid surprises and delays (Robinson 126). The business stakeholders must be aware of the strict laws and compliances including the rights of the investors when it comes to money transactions to avoiding serious consequences.

 Individual Viewpoint.

The nature of the hemp and cannabis industry is likely to attract both time wasters and serious players. When raising funds for this business, one must be careful to identify the serious investors from the time wasters and this helps to concentrate more time and energy on investors who are likely to bring a positive change to the company.

Work Cited

Bowyer, Jim L. “Industrial hemp (Cannabis sativa L.) as a papermaking raw material in Minnesota: Technical, economic, and environmental considerations.” Department of Wood & Paper Science Report Series (2011).

Lane, Amy. “Industrial Hemp: Building a Sustainable Future.” (2018).

Krawitz, Michael. “Collectible Cannabis Art.” Journal of Industrial Hemp 12.1 (2007): 47-54.

Newman, Jonathan, and Tim Lay. “Medical Cannabis Bike Tour funds glioblastoma clinical trial.” Health Europa Quarterly 5 (2018).

Robinson, Rowan. The great book of hemp: the complete guide to the environmental, commercial, and medicinal uses of the world’s most extraordinary plant. Inner Traditions/Bear & Co, 2016.