InvestInMJ Admin

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

There were always some questions about what a Trump Gov’t would mean to the cannabis industry.  With very little mention of it during the elections and after him taking office, industry participants and companies had no clear indication on what his presidency would mean to the cannabis industry.  Today, comments from press secretary Sean Spicer has shed some light on what their thoughts are on the subject of medical and recreational marijuana.  

While the comments haven’t given a green light for moving forwards with cannabis reforms at the federal level, it does look like the president appreciates medical marijuana laws.  However the recreational marijuana initiatives by various states may come under scrutiny and become questionable under Jeff Sessions at the Dept. of Justice.   The comments below don’t give much indication on what this would mean to the recreational market, but it does create a lot more uncertainty.    The question around the recreational market will be left to the Dept. of Justice and Secretary Sean Spicer does believe there will be greater enforcement around it and the DOJ will be looking into it further.  What “greater enforcement” means to States who have current or planned recreational laws is uncertain, but we are confident they will get more aggressive with the illegal and grey market area when it comes to marijuana sales and use.

Press Briefing by Press Secretary Sean Spicer, 2/23/2017, #15

Q     I have a question on medical marijuana.  Our state voters passed a medical marijuana amendment in November.  Now we're in conflict with federal law, as many other states are.  The Obama administration kind of chose not to strictly enforce those federal marijuana laws.  My question to you is:  With Jeff Sessions over at the Department of Justice as AG, what’s going to be the Trump administration’s position on marijuana legalization where it’s in a state-federal conflict like this?

MR. SPICER:   There’s two distinct issues here: medical marijuana and recreational marijuana.  

I think medical marijuana, I’ve said before that the President understands the pain and suffering that many people go through who are facing especially terminal diseases and the comfort that some of these drugs, including medical marijuana, can bring to them.  And that's one that Congress, through a rider in 2011 -- looking for a little help -- I think put in an appropriations bill saying the Department of Justice wouldn’t be funded to go after those folks.  

There is a big difference between that and recreational marijuana.  And I think that when you see something like the opioid addiction crisis blossoming in so many states around this country, the last thing that we should be doing is encouraging people.  There is still a federal law that we need to abide by in terms of the medical -- when it comes to recreational marijuana and other drugs of that nature.  

So I think there’s a big difference between medical marijuana, which states have a -- the states where it’s allowed, in accordance with the appropriations rider, have set forth a process to administer and regulate that usage, versus recreational marijuana.  That’s a very, very different subject.

Q:  So is the federal government then going to take some sort of action around this recreational marijuana in some of these states?

MR. SPICER:  Well, I think that’s a question for the Department of Justice.  I do believe that you’ll see greater enforcement of it.  Because again, there’s a big difference between the medical use which Congress has, through an appropriations rider in 2014, made very clear what their intent was in terms of how the Department of Justice would handle that issue.  That’s very different than the recreational use, which is something the Department of Justice I think will be further looking into.  

So what does this mean for companies operating in the recreational market?  It surely does create uncertainty and that is something the market doesn’t like.   The cannabis sector has gained much attention over the last year, especially leading up to the US elections and after.  Many of the stock prices has risen significantly over the last 6 months as the industry is anticipating the recreational market will continue to expand in the various states which have moved towards legalization. 

What does this mean for investments in the US related cannabis industry?  We believe that the euphoria in company valuations and the stock price rising as it has over the last 6 months will become subdued.  The sector needs to take a breather and digest the potential outcome of anti-recreational DOJ.  While we remain optimistic on the sector overall, investors should keep in mind the stock prices and valuations probably have gotten ahead of themselves and are likely for a correction.  We will be providing an update to our newsletter subscribers very shortly on what this means to their current and future investment strategies and objectives when it comes marijuana stocks with exposure to US markets.  Sign up for our newsletter to get additional insights and opportunities on the cannabis sector.

Dear Shareholders,
 
It is with great pleasure that I address you today as shareholders of our company, The Green Organic Dutchman Holdings Ltd. (“TGOD”).  Our Company has recently made major developments that I would like to report on. Additionally, I would like to announce a new financing.
 
Firstly, I would like to thank all of you who participated in our last financing, which I’m pleased to report was oversubscribed by 300%, allowing us to close on $13,200,000 with over 1,300 new shareholders.
 
Please always remember that we are a shareholder driven company, managed and directed by our shareholders.
 
UPDATE HIGHLIGHTS

• The company successfully completed a heavily over-subscribed $13,200,000 initial financing
• TGOD has secured an additional and contiguous 75-acre property bringing the incumbent land package to 100 acres,
• The company has added significantly to both the corporate, operational and project management teams
• Engineering and design for Phase 1 Expansion of 145,000 sq. ft. commenced in January. This expansion will increase the current annual productive capacity from 1,000KG’s to over 14,000KG’s.
• Engaged Larssen Greenhouse Engineering, who specialises in the technical design and building of the most modern and sophisticated hybrid-greenhouses in the industry
• Stratigic Partnership formed with Eaton, one of the worlds larget power management and energy optimization companies
• Stratigic Partnership formed with Ledcor, one of Canadas largest construction management companies
• TGOD announces it last planned financing prior to IPO
   

PROPERTY ACQUISITION
The Company secured 75-acres of contiguous land, directly adjoining the currently ACMPR licensed production facility. This additional land sets TGOD apart from much of its peers, allowing for large-scale and accelerated expansion plans.
 
PHASE 1 EXPANSION
Engineering and design for our Phase 1 expansion are well underway, and management anticipates construction to begin late in Q2, 2017. The Company has expedited its original plan and increased its size and scope, we will be executing on Phase 1, two-part expansion:
Hybrid Expansion:

• A 125,000 sq. ft. of state-of-the-art, automated, hybrid facility
• Additional annual capacity of ~11,000KG’s
• Anticipated Q2 2018 initial harvest

Enclosed Expansion:

• A 20,000 sq. ft. State of the art indoor facility
• Additional annual capacity of ~2,000KG’s
• Anticipated Q1 2018 initial harvest

Following the completion of the Phase 1 expansion, TGOD’s production capacity is expected to be ~14,000KG’s annually. The Company has built a team of highly experienced power, energy optimization and construction professionals to ensure this expansion is delivered not only on-time and on-budget but also completed to the highest possible standards, potentially setting a new standard for our industry.
 
OPERATIONAL MANAGEMENT TEAM ADDITIONS (full bios can be found in presentation)
Amer Cheema, M.Sc. (Hons.): Agriculture and a PhD Candidate in Post-Harvest Biology

• Award winning head grower with +20 years experience in production & management of high-tech commercial greenhouses

 
Lola Millerman, B.Sc. in Biology from UBC

• Senior Microbiologis and Labratory Supervisor with Nestle Canada

 
Brandan Leroux, M. Sc. Candidate: Environmental & Life Science, Trent University

• Developed and implemented a research thesis in plant genetics with emphasis on environmental resource allocations specifically related to vegetative and sexual propagation

 
Chad Rigby, BSc in Environmental Biology from the University of Guelph, minor in Plant Sciences and Plant Biochemistry

• Previously worked with another licesed producer as production assistant

 
CORPORATE MANAGEMENT TEAM ADDITIONS: (full bios can be found in presentation)
Jim Shone, MBA Queens, CFA

• 20 years in the Canadian financial services industry, focused on small to medium sized enterprises. 12 years commercial banking experience (BDC for 7 years and factoring company for 4 ½ years)

Stevan Perry

• 20+ years as senior energy services and major projects business development executive. Successfully developed and delivered on business models and project plans for fortune 100 companies such as Honeywell and Eaton.

Matt Schmidt, MBA Laurier University

• Previously Vice President, Investment Banking at Echelon Wealth Partners - responsible for the firm’s initiation into the Canadian Cannabis sector

Danny Brody

• 10+ years’ experience in finance and holds a Chartered Investment Manager (CIM) designation from the Canadian Securities Institute (CSI).  Previously Director of IR at Emblem Corp.

ADVISORS ADDITIONS: (full bios can be found in presentation)
Brian Ast, MBA, CFA, P.Eng

• +20 years experience in project bid managemnt, contract and cost control for both the public and private sector. Curreently Director, Public & Private Partnerships with Honewell Building Solutions 

Harold Ruckpaul

• 31 years of technical, operational and sales management experience with developing and implementing power systems solutions to primary mar­ket segments on a global scale.

Justin Fraser

• 20+ years’ experience in team building, including the ability to select and implement strategic relationships for optimal business performance.  Currently Chairman & CEO of the Trades Labour Group.

We hope that you can appreciate the amount of work that has been accomplished in such a short period of time (just over 60 days), and we are not going to slow down, but rather pick-up the pace now that we have rounded out our operational, management and project construction teams. To keep you informed of our developments on a regular basis Danny Brody, VP IR will be sending out a monthly update and our IR department always welcomes your calls.

It is our belief that the foundation of this company is our shareholders and this is your company. As we the managing shareholders are hard at work we would like to call on all the other shareholders from time to time to help grow OUR business. This is one of those times, it is imperative to our business plan that we brand the TGOD name, create awareness of our upcoming product offerings from a grass roots level (all of you) and increase the number of shareholders. So, if you think you know someone that would like to learn about TGOD please take a moment and send a copy of our presentation to those interested parties.

This is the best way to grow any business and remember this is your Company.

In closing, we would like to announce the details of a proposed non-brokered equity financing to raise a minimum of $10,000,000.

The Green Organic Dutchman Holdings Ltd. (“Company”) is pleased to announce that it is conducting a best efforts equity financing to raise aggregate gross proceeds of $10,000,000 (the “Offering”) through the issuance of common share units (the "Units") at a price of $1.15 per Unit.  Each Unit will consist of one common share of the Company (a "Common Share") and one common share purchase warrant of the Company (a "Warrant"). Each Warrant is exercisable into one Common Share (the "Warrant Share") at the exercise price of $2.15 per share for a period of 24 months from the closing date (“Closing Date”) of the Offering.  It is intended that the Warrants will be transferable and will be subject to acceleration in the event that the volume weighted average price of the Common Shares is equal to or greater than $2.80 over a period of ten consecutive days. The Common Shares and Warrants will be subject to a six-month contractual escrow period from the date the Company’s common shares (or derivative thereof) are listed on an exchange (“Listing Date”). The Warrant Shares will be subject to a twelve-month contractual escrow period from the Closing Date.
 
"This is a unique retail shareholder driven financing, that allows as many potential patients to participate as an investor, in the upside of our Company," states Rob Anderson, CEO of TGOD.
 
Please note that if you have an interest in the financing contact our IR department.
To view a copy of the Company’s full corporate presentation please visit:
http://greenorganicdutchman.com/dl/TGOD.pdf
 
CONTACT INFORMATION :
Brett Allan
Email: ballan@tgod.ca
Phone: 905-304-4201
www.tgod.ca
 
ABOUT GREEN ORGANIC DUTCHMAN
The Green Organic Dutchman Ltd. Produces Farm Grown, Pharma Grade Organic Cannabis. The Company grows high quality, organically grown medical cannabis in small batches using craft growing, all natural principles.  The Green Organic Dutchman Ltd. is licensed under the access to cannabis for medical purposes regulations (ACMPR) to cultivate medical marijuana, and carries out its principal activities producing marijuana from its facilities in Ancaster, Ont., pursuant to the provisions of the ACMPR and the Controlled Drugs and Substances Act (Canada) and its regulations.
This update contains forward-looking information, which involves known and unknown risks, uncertainties and other factors that may cause actual events to differ materially from current expectation. Important factors -- including the availability of funds, the results of financing efforts and the parties' due diligence reviews, and general market conditions -- that could cause actual results to differ materially from the Company's expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements

Germany’s lower house of parliament passed a bill legalizing the production, sale and use of medical marijuana Thursday, Jan. 19 in Berlin.

The bill limits the sale and use of cannabis to those patients “in very limited exceptional cases,” such as with patients suffering from multiple sclerosis, epilepsy, chronic pain, and lack of appetite or nausea related to cancer treatments. Those patients will not be allowed to grow their own medicine at home.

As restrictive as this program might sound, it is an improvement to what existed. Until this law was passed, medical cannabis was only available on a case-by-case basis, as allowed by German authorities. This bill allows patients to get a prescription from their doctor, which can be filled at local pharmacies.

Two more licensed medical marijuana producers have voluntarily recalled hundreds of grams of the drug after traces of a controversial pesticide banned in Canada were detected in their supply, raising questions about Ottawa’s oversight of an industry expected to explode with the upcoming legalization of cannabis.

Last week, Organigram, a publicly traded grower based in Moncton, expanded a Dec. 28 recall of a small amount of product to include almost all of its cannabis buds and oils produced in 2016.

On Monday, Aurora Cannabis Enterprises Inc., a publicly traded firm based in Alberta, announced it had recalled seven lots of cannabis it had bought from Organigram and sold to its clients – through the mail-order system overseen by Health Canada – from August to October of last year.