Excerpt: Are IPOs an efficient way of raising capital for a marijuana business?
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In a fast-paced modern world where every piece of information can be accessed with a click, creativity and strategic execution of plans are ideal in raising capital for a marijuana business that seeks to be noticed. And while issuing an initial public offering (IPO) is one of the most common methods to do it, the stakes in doing so would be very high. However, as per Financial Times, IPOs tend to be very risky, and as such, are only for those who are willing to.
The primary benefits of raising capital through IPOs
The game is to find the most efficient mode for raising capital, which should be one of your priorities if you’re a corporate entity focused on marijuana. At this point, good capital should be your be-all-end-all, as it will be used for organic growth, buying more resources, infrastructure setup, and machinery. In addition, other requirements such as hiring personnel who are experts in the cultivation of the plant itself is needed as well.
Another thing to consider if you’re in the distribution sector is the need for retail space, and that’s not counting the acquisitions and mergers that may eventually happen further down the road. Every aspect of the business will require capital investments and it’s always a good idea to be prepared for anything. In addition, the marijuana industry has two main markets: medical and recreational. And knowing when and how to explore both of these verticals will only be beneficial in the future.
An IPO is the most intelligent form of capital fundraising. This is because once you are a known public company and you have underwriters who are willing to present you to the market and offer your shares to individual investors, it will be a cost effective and strategic way of raising funds.
U.S. vs. Canada stock exchanges, which is better and why?
In terms of population, U.S. stock exchanges exhibit easier access than Candian ones. Stocks that trade well here are easily available, making it more feasible for issuers and investors looking to make maximum gains. Furthermore, the extra exposure and the endless possibilities that the U.S. market opens for you makes it a reasonably appropriate place to make investments and raise much-needed capital for businesses.
However, with the legality of recreational and medicinal marijuana varying by state, it can easily get confusing, leaving you scrambling in the dark.
The answer to this is simple. Of course, having a business with functions that aren’t under the compliance of U.S. federal law takes away the possibility of listing in U.S. stock exchanges. However, having an able set of advisors who understands the legalities and who can guide you through the entire process will help you make the right choices for your capital raising requirements.
One good example of this is a marijuana-focused firm named PotNetwork Holdings, Inc., which, through its top-class product distribution and dedicated team of advisers that include doctors and industry experts, has managed to consistently top its yearly growth in terms of revenue and market reach.
PotNetwork Holdings, Inc.
A firm that has seen tremendous leaps and bounds in terms of growth, PotNetwork Holdings, Inc. (OTCMKTS:POTN) is a Colorado-based firm that has rightfully earned its position as one of the frontrunners in the industry. Dedicating itself to the research, development, and multinational distribution of pure and premium-quality hemp extracts, POTN is a good example of a company that has thrived in this space. The firm also operates as a publicly traded company with the primary motive of maintaining long and successful shareholder growth.
In addition, the company also functions as a holding company for its many subsidiaries, including Diamond CBD, which is currently one of the most well-known manufacturers of cannabidiol (CBD) products all throughout the country. Distributing several kinds of CBD oils, pet products, edible gummies, vape pens, pre-rolled joints and a number of other easily consumable products for the medical and recreational marijuana market, the company has managed to gain a strong market, practically doubling its revenues month after month. As a result, its parent company has seen record breaking growth in the first half of 2018, and aims to reach new heights in terms of expansion and revenue generation for the remainder of the year.
With changing government dispositions and market conditions, it has become all the more important that companies go about making their moves even more carefully. One wrong move can not only cause you losses, but pull you out of the game altogether. It is advisable to keep a team of experienced advisors at hand who can guide you through the treacherous process of raising marijuana capital, and POTN’s example is one method to learn from.