Grow, Gift, Repair

A nice primer of crowdfunding in the industry

The simplest and cheapest option is the Regulation CF approach, which requires you to raise through crowdfunding platforms such as StartEngine and Republic, which have been willing to host marijuana offerings.

To conduct a platform-based crowdfunding, marijuana companies must have an account with a bank or credit union to serve as an escrow agent and hold investors’ money during the crowdfunding process. The marijuana company also must verify that its chosen platform will host cannabis companies, because the brokerage firms behind the platforms won’t accept marijuana business.

“There are a lot of broker-dealers who won’t touch marijuana deals,” Sidoti said, adding that they are “sensitive to the risk” and don’t want to deal with any extra compliance burdens.

Once you’ve found a platform, the issuer files a Form CF and disclosures with the SEC. Issuers also need to organize a marketing campaign that should involve social media channels and online advertising, while pitches should be organized for various mediums—from social media and internet to over the phone and in person.

Sidoti said her most successful clients take time to approach at least potentially bigger investors with a personal touch that can be initiated with emails or letters and followed up with phone calls and meetings.