If you want to raise capital, go out and do it but also read books, watch videos, talk with lenders, and people who have the experience. You’ll notice that you first have to put your own time and money in. You are the first customer, investor, and employee in your new venture.
Raising capital is complicated, and it’s our job to make the company message easily understandable for lenders. That message needs to be transparent for your customers, employees, contractors, and your neighboring local community.
When I decided to chase a state-issued marijuana license, there were a few things that developed as sacrifices. After reducing my spending on alcohol, social life, material items, and unnecessary traveling, here are five financial points of which I’ve concentrated my mind on stabilizing:
State Application Funds: To submit a completed state marijuana application, you’ll need anywhere from $50,000-$250,000 in cash or credit. Nowhere on the app or in the regulations is that written, but I’m just relaying my experience.
In April 2018, my business partner and I became one of roughly 125 Economic Empowerment (EE) applicants, designated by the Cannabis Control Commission. As an EE business, we have a priority application review, aligning us with medical marijuana businesses that choose to convert their operation from the medicinal market to adult-use.
These “medical” marijuana businesses are mostly white people who are well-capitalized. Because marijuana prohibition has unfavorably impacted people of color & low-income communities, there is a need for resources to flow backward.
It’s possible to have good people in the industry as individuals. When collective organizations fail to increase full participation and only care about their company interests, that’s where the ethical disconnect starts to peak its head.
The Local Business Fees: The locals need to get paid to, its like a right of passage. The lawyer, contractors, non-profit, or even the local government, your dollars will circulate town in some fashion. What you don’t want to get caught in is the “pay-to-play” model where companies are dishing out dollars to municipal leadership to enter a city or town to operate. It certainly helps to be local, with boots on the ground to get sh*t done.
And even better when you have decent ties to the soil because you’ll have to host community meetings, talk with other local businesses, show up to city hall, and plan for public hearings.
Capital Raise: Be present, there is no better time than now. Don’t turn down a finance conversation; there is always something to learn. At times, it’s not great to talk in absolutes (always, never, only, all), but the truth is, even in bad times, you can learn, and it starts with a positive mindset.
If you set our to raise millions for your venture, I believe you can do it, just don’t quit and you will develop patience. Time has a funny way of working in your favor, and if you trust the process, so it will come to pass.
Documents you’ll have to be prepared to distribute and or edit on the fly: your financial statements (primarily a P&L), business plan, one-page summary, pitch deck, and any confirmed documents from the state or local governments. These documents are like living a fitness lifestyle, with muscle memory. There is a season for bulking and a season for trimming, and at times, you’ll have to add some meat, and other times you’ll take some off.
Amassing Content: Documentation is beyond outstanding; it is the way to go if you want to set your brand apart. And I’m not talking about spewing your random rants; we are talking thought-out, content with value but also deliver it in a way which seems effortless.
The role of the content is to inform and attract people. You’ll have to find a way to manage your digital assets. With the cost of storage being relatively inexpensive, get yourself a camera, and a team of skilled content creators.
Employees, partners, and customers have to believe the companies story is valuable enough to tell other people in an everlasting manner, where retention is high. And the best way to create high retention content is by obsessing over your target customers, and knowing what they find valuable to share with friends and family.
Cash Flow: Is the net amount of funds transferred in and out of business. Having a strong cash flow means your business is recognizing paying customers. In many industries, having paying customers is an excellent tool for raising more funds for expansion.
In cannabis, there are unregulated, regulated, and gray markets. Are you willing to take on the risk of unregulated marijuana sales while also having aspirations of transitioning into the regulated market, where you can pay taxes?
It certainly helps to carry on market research and obsess over the culture which crosses boundaries from regulated to unregulated, but only you can answer that question. Meanwhile, find ways to start cash flow, which will help build your brand without putting your chances of getting a license in jeopardy. The licensing commission is watching and is quick to tell you what you are not doing right. Fun!
I co-founded Major Bloom because I’ve obsessed with the culture and history of cannabis. Maxing out my credit cards, putting up my cash, negotiating finance terms, raising seed funding, and now moving own to raise $1M we needed to get through construction and start operations. At this moment, sharing these points and going through these processes bring me joy, and I want to share that same joy and value with you. Looking deep-within to stabilize what you can control in a volatile world.