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Invest In MJ News (#IMJ) Update for March 15 2017

As we mentioned a few days ago, we are in a healthy correction in the Cannabis sector for stock price and valuations.  In Canada, the valuations of the licensed producers have gotten way ahead of itself over the last few months; they should start to build a base during the summer before moving higher going into fall and winter of 2018.

Looks like the sector will move sideways for some time, this creates a good trading opportunity, new entry points for new positions or adding to existing positions.  Sign up for our newsletter to get more ideas on investing and trading the MJ Stocks.

One of the companies we provide coverage on is Emblem Cannabis, the chart below is some initial technical analysis we provide as part of our research.  You can view price charts and company info on Emblem from our company directory.  Our latest news letter provides more details on Emblem, investment and trading strategies. 

b2ap3_thumbnail_EMCchart_mar13.jpg

Our company directory listing provides detailed information on various publicly traded companies including price charts.  You are welcome to use the charting tool and perform your own technical analysis to the price action of the company’s stock. 

Latest Company Financing News:

Organigram Announces Issuance of Stock Options

MONCTON, NEW BRUNSWICK--(Marketwired - March 14, 2017) - Organigram Holdings Inc. (TSX VENTURE:OGI)(OTCQB:OGRMF) ("Organigram" or the "Company") announces that it has issued an aggregate of 1,500,000 incentive stock options to Greg Engel, a director of the Company and the Company's Chief Executive Officer, at an exercise price of $2.36 per share. View Company Directory Listing on #IMJ

Kitrinor Metals Inc. and Scythian Biosciences Inc. Announce Closing of Subscription Receipt Financing of $13,085,000 With Strategic Lead Investment From Aphria Inc.
Scythian Biosciences Inc. is developing a proprietary Cannabinoid combination therapy for the prevention and treatment of concussions and traumatic brain injury

TORONTO, ONTARIO--(Marketwired - March 14, 2017) - NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES

Further to the press release dated February 21, 2017, Kitrinor Metals Inc. (TSX VENTURE:KIT) (the "Company") and Scythian Biosciences Inc. ("Scythian"), a company incorporated under the federal laws of Canada, are pleased to announce that Scythian completed an initial tranche of a brokered private placement offering of subscription receipts ("Subscription Receipts") led by Clarus Securities Inc. (the "Lead Agent"), together with Haywood Securities Inc. and Canaccord Genuity Corp. (collectively, the "Agents"), for gross proceeds of C$13,085,000 (the "Offering"). 

GrowGeneration Secures $1,650,000 in Capital From Merida Capital Partners to Continue to Fuel Growth
DENVER, CO--(Marketwired - March 14, 2017) - GrowGeneration Corp. (OTCQB: GRWG)

METATRON (OTC PINK: MRNJ) Announces $1,000,000 Reg A Capital Raise to fund Cannabis & Vaporize, a Secure Chat App
DOVER, DE--(Marketwired - Mar 14, 2017)

 

 

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Marijuana Investments: A Word to the Wise

With more cannabis retailers and dispensaries entering the market, marijuana entrepreneurs are having an increasingly difficult time distinguishing their brands and product lines. The need to stand out is not only necessary to secure to new customers (once the company is up and running) but more importantly, to initially entice investors and convince them that the business model is sufficiently unique to succeed.  Indeed, raising capital from investors is absolutely critical for many marijuana entrepreneurs and as a corollary, an exciting proposition for investors looking to capitalize on this popular and growing industry. 

Cannabis Investors or Cannabis Lenders?

Cannabis investors may provide capital to cannabis entrepreneurs in (generally speaking) one of two ways; equity or debt.  A simple capital-for-equity model is fairly straightforward - investors buy into the company at a given valuation and in return, own a part of the company.  The second option, debt, is often a much more complex transaction and involves the "investor", who may not be an investor in any pure sense of the word, loaning the company money at a high rate of interest. Unfortunately, many smaller investors (or lenders, depending on your perspective) are not sufficiently equipped to protect their interests in the event that the marijuana business goes under.   

What happens when the invested in cannabis defaults on the loan? Here are your two options:

(1) Renegotiate the Marijuana Startup's Debt

Promissory notes that are well drafted typically contain a statement regarding an uncured event of default, which causes the debt to accelerate. Thus, if the cannabis business you have invested in misses a payment and does not make a late payment by a cure date, that company’s entire debt is due. When this happens, partners tend to negotiate an extension, and you as the financer can extract concessions from your borrower (i.e. security interests, personal guarantees, or pledges of ownership in the company). This generally happens so that your borrower can avoid you obtaining a judgment against them.

(2) Get A Judgment Against Your Cannabis Borrower

If you have the money to obtain a judgment against your borrower, you can use that judgment to levy on the borrower’s business assets.  The idea here of course is to seize assets of your borrower that are sufficiently valuable to cover your losses.  In many states, if you are indeed awarded a judgment against your marijuana borrower, you may also be eligible to be reimbursed for attorney fees and other associated costs.

A Note of Caution: Fraudulent Transfers

Unfortunately, it is not too uncommon for companies in debt to do everything in their power to avoid paying it.  Once such method used to this end is the employment of a fraudulent transfer. A fraudulent transfer occurs when a borrower transfers the company’s property to a third party, without receiving something back of equal value, in order to deplete the company of the funds required to repay the financer. This is undoubtedly a dirtier tactic and if intent can be established may rise to the level of criminal liability.

Be Proactive in Protecting Your Assets

Ultimately, if you are planning to finance or lend to a cannabis company, it is important to develop a contingency plan that accounts for the possibility of a failed business. Is your agreement with the marijuana company tight and drafted in such a way as to maximize your protections?  If the business goes under, can you sustain the loss of your entire investment? Do you have funds to litigate in court?  Unfortunately, the legalization of cannabis does not guarantee businesses financial success.

Blog Provided By: Abe Cohn is COO of THC Legal Group, a Marijuana Law Firm specializing legal protection for the cannabis industry.  For more information, please visit their website at http://www.THCLegalGroup.com

For more information on THC Legal Group, view the company directory listing on Invest In MJ

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