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The Canna Unicorns assists THC, CBD/HEMP and ancillary companies in raising capital legally and cost effectively.  We create your documents needed to raise capital at less than half the cost of an attorney.  We work hand in hand with either your attorney or ours.   

We also provide access to investor groups for both emerging company and existing public companies.  We have great relationships with investment bankers and broker-dealers around the country for companies that are approved for general solicitation through either a Reg A, or a Crowdfunding exemption.  
   

Here is a brief overview of our service package(s) and how we approach this relatively complex subject of legally raising capital.

First let’s agree that every company has a different niche, and a different need, and a different fact pattern as to what they can do, can’t do, and desire to do as relates to raising money. 

Next, let’s agree that there are certainly different types of money, i.e. loans, equity and combinations thereof.

And after that, let’s explore what a company needs to raise money, no matter what type of money is to be  raised.

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Types of Money:

To provide the best possible solution to the clients we work with, I am part of a syndicate of professionals that have access to various types of capital.   Our team includes:

  • A professional who deals with companies financing needs AFTER they are public. This can be as simple as basic stock promotion or as complex as working out infractions with the SEC and FINRA.
      
  • We have associates that will lend money on public stock, often called a ‘stock loan’.
      
  • I personally help pre-public companies that think they may wish to ‘go big’ use the Regulation A, Reg D, Reg CF (Crowdfunding), or PPM legal documents to legally raise money.  Each of these documents fits a certain scenario for a certain type of company.
      
  • We have associates that provide commercial lending, mainly asset based.  Some of these lenders will take a risk for a higher return, some won’t.
      
  • We have VC/Fund associates that will take equity investments.  
      
  • And there are endless variations…

Overall, we will assist you in determining the right combination of funding sources so as to minimize what you have to give up for the money.  And assuming that your company can complete the proper steps and requirements as shown below, then we will introduce you to our funding sources.  This means that at the same time we are helping prepare you for raising capital, we are vetting you so that we can be confident about your company when talking to our money sources.

 

Call Robert Merrill Fletcher, ChE at 213.500.7236
for immediate answers to your documentation questions.

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Common Elements That Every Company Must Have When Raising Money:

No matter what style, or type of money the client seeks, there are a few elements that MUST be in place.

  1. There must be a succinct presentation about the company. This is typically referred to as a PITCH DECK.  These have gotten smaller and tighter over the years as people’s attention spans have diminished and we have all gotten busier.  Sometimes a simple PDF will suffice.  Often a company will have “something”.  Often that ‘something’ works against them not for them if it does not fit the current standards that money people expect to see.
  2. Financial Data must be available whether for equity or loan financing.  Loans to the company might be the easiest to ‘paper’ but often the company doesn’t have any asset to place the loan against.  We see commercial loans at the lowest percentage if the company has two years of audited financials, assets, etc… just like getting a mortgage the diligence is quite exhausting, but for some clients, they are a great way to garner capital without giving up equity.  Of course, if the company is selling equity, then a proforma plus whatever financials are definitely required.
  3. A legal document to accept the money properly is one of the most important elements that any company should have as they raise capital.  A loan document is quite simple to visualize.  A PPM (Private Placement Memorandum) can be used if the number of investors is small, and they are typically known to the company.  Perhaps a Convertible Loan is called for. Or, if the company is really going to seek outside sources of capital (beyond warm handshakes) then we begin to discuss the intricacies of Crowdfunding, Reg D, and Reg A.
  4. Investor Relations and Marketing the Investment is one step that most companies tend to not think about.  Who is going to answer the calls and answer questions if and when interested parties come in?  The founder?  Is there a process to recontact leads?  Is there regular communications about the company to interested parties, clients, and others?  How is the investment marketed?  (And what legal constraints apply).

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Conclusion: What do we do?

Our Capital Advisory Group makes sure that you can raise money legally and as cost effectively as possible.  We make the process as streamlined and legal as possible so that you can sleep well at night.  We help you with the presentation, arrange your financials, providing the legal documents you need, and then, if desired, helping you manage the entire process of bringing in investors.

Are there any guarantees about raising money? You know the answer to that one.  All we can say is that the more professional you appear, the better the likelihood of success will be.

We believe the PPM > Reg D > Reg A+ process is the proper way for emerging companies to take advantage of the current investment climate supporting cannabis.  We see a trend towards using PPMs and Reg D for early investors and then Tier II Reg A’s for $50 MM and if desired, public listing on either Nasdaq or NYSE.  We don’t believe in OTC and Canada anymore. Public shell / reverse mergers are old news.  They typically require extensive cleanup and the broker-dealers don’t like them.  We believe the Canadian exchange is just too small and we would rather go to ‘the big board’ with our clients. 

Not only do we help find investors, we take lead in the physical writing of documents such as  PPM, Crowdfunding, Reg D, Reg A+ submissions at a substantial cost savings over paying a law firm to write them.  We then work with your attorneys, or ours, to legally complete the process.

 

Call Robert Merrill Fletcher, ChE at 213.500.7236
for immediate answers to your Documentation questions.

We are not lawyers and we do not bill at their astronomical levels.   We work WITH your law firm, or we can recommend a cannabis focused law firm that has numerous successful SEC registrations, taken lead on dozens of public listings, and who has    extensive relationships in  the investment banking and broker-dealer networks if your vision goes all the way to a public offering.   Also, the law firm we work with provides a reduced retainer to our clients because we do the organizational work necessary before the documents reach the lawyer’s desk.    ( If you have already begun writing your documents we are happy to provide referrals to trusted and capable attorneys and accounting firms that can help push your project through to a successful registration). 

We also help pitch for our clients. 

Here are just a few examples from one of the law firms we work with:  The Xspand Reg A+ is generally considered one of the most successful Reg A+ to date.

https://www.sec.gov/Archives/edgar/data/1731348/000119312518219032/d545137ds1a.htm 
https://www.sec.gov/Archives/edgar/data/1054476/000114420418049880/tv503002_partiiandiii.htm
https://www.sec.gov/Archives/edgar/data/1656472/000104746918002317/a2235060zf-10a.htm
https://www.sec.gov/Archives/edgar/data/1717556/000114420418022443/tv492037-1apos.htm
https://www.sec.gov/Archives/edgar/data/1721980/000114420418037008/tv497591-s1a.htm

We estimate that our document process will save you 50% or more on the cost of producing your capital raising documentation.  In addition, we have “cannabis, marijuana, CBD and hemp risk factor” templates that have already been approved to the highest levels.  There is no need to write these sections of your documents from scratch and often we can have your documents created within 30 days.

The Canna Unicorns was founded by a chemical engineer and a thirty year “C-Level” businessman.   Our team of professionals, lawyers, and accountants, bring real-world experience to every client, usually on a success-fee basis which means the bulk of our payment occurs AFTER money is raised.  TheCannaUnicorns covers both the East and West coasts and all cannabis sectors.

Mr. Fletcher, the CEO states, “As someone that has raised money both  successfully and unsuccessfully, I cannot over-stress the importance of taking control of investor conversations.  This means that the COMPANY manages the valuation numbers, not the investor.  My recommendation is that as soon as we contract for a Tier II Reg A+, you should issue a formal Press Release that says, “The company has issued contracts to  prepare a Reg A+ offering for a public listing and raise $50MM”.    The instant that Press Release goes out, your valuation goes up, and it allows you to put the closing hammer on any investor fence-sitters.  You can say (and mean it) that, “you’d better make a decision because when this gets going, you will never get this pre-IPO-money valuation again”.  It works, believe me, concluded Mr. Fletcher.

Mr. Robert Merrill Fletcher, ChE, the founder of TheCannaUnicorns  has over 30 years of entrepreneurial experience in raising capital, startups, business operations and sales management. He is an expert in BPM (Business Process Management) and TQM (Total Quality Management). He graduated as a Chemical Engineer from Louisiana State University and has consulted with Shell, Exxon, and numerous other global petrochemical companies on projects around the world.  He has done business in mainland China, Taiwan, Malaysia, Abu Dhabi, and India and has managed virtual workforces of hundreds of people around the world. He is an avid boater and golfer and has two lovely daughters and he splits his time between South Florida and Western North Carolina.  Being semi-retired he picks and chooses great people and great companies to work with.

CONTACT:

Robert Merrill Fletcher, ChE

213.500.7236 (EST)

Robert@TheCannaUnicorns.com

FREQUENTLY ASKED QUESTIONS

 

Q: PPM, Crowdfunding, Reg D, Reg A+… which should I use?

A:  Right now, we suggest that our clients visualize a final goal of raising up to $50MM with a Tier II Regulation A+ pre-IPO approval. Why? First, investment money is flooding into cannabis and the time may never be better, therefore valuations will likely never be better.  Second, once the risk factors and the basic company “story” is put together, then all the documents are very much versions of the same data, simply restructured.  So, we see the answer is “all of the above” depending on the circumstances.

For example, if you have a consumer product (B2C, not B2B) then we really like to consider starting with crowdfunding, and then with proof of consumer acceptance, raising the next level of capital is greatly facilitated.

If you have already begun talking to high net worth investors, then the Reg D is the way to go.

Sometimes, a simple PPM is all that is needed. 

So, just give us a call or an email and we can help you sort it out.

 

Q: What are the documents that are required for a Regulation A+ (or most substantial money raises)?

A: There are some common “sections” in all the documents for this process.  I have listed them below with a few ‘real world comments’.

  • Articles of Incorporation (or new Incorporation):  It is rare that the “OldCo” is properly structured for legally and properly raising money. This is one of the “points of analysis” that is part of the early assessment.  The key is to have a stock/corporate structure that 1) can “go all the way”, and 2) protects the company and current owners.  You might make a note that the old ‘preferred state of incorporation’ was Delaware, it is now moving to Nevada, particularly with cannabis.  
  • Existing capitalization table, including list of existing shareholders, particularly those over 10%.  Particular attention must be paid to whether any of 10%+ shareholders have any regulatory issues, particularly in stock sales.  FINRA certified professionals understand the concept of ‘bad actor’ provisions.  
  • The Business Plan is almost the least important feature of the package.  The lawyers make this so vanilla that it is almost worthless other than the broad strokes of the business basics.  Certainly no “projections” are included.   There are a number of “pitch gotchas” that a company that is planning a capital raise MUST be aware of.  Our team is well schooled in what you can and can’t say once you enter this process and this is critical for understanding of everyone that is dealing with investors.  There are issues with a “blank check” company meaning no revenues, no expenses, and built for only acquisitions, but as long as the company has a viable plan, then there is no issue with that element in a Reg A+ offering.  
  • Management Team:  This is an important section.  We need bio’s and resumes.  Depending on how far your vision goes, there are requirements regarding the Board of Directors necessary to go for a public listing.  The concept of “stacking the board” with top resumes is always a good discussion to have.  
  • Risk Factors: This is the most extensive section in the document set, particularly for cannabis.  Our set of cannabis risk factors has already been approved “without comment” by the SEC, and this is one of the values we bring to the table.   Our goal is to have MINIMAL back and forth with the SEC once the documents are submitted.  
  • A discussion of your current legal advisors.  In general we prefer to work with our attorney group for this very specific set of legal rules.   Typically they will interact with your business law firm to integrate your capital engineering to a satisfactory conclusion.  
  • A discussion of your accounting process and firm.  This is often the longest time frame item, particularly if acquisitions or mergers have occurred.    
  • DISCLAIMER: THIS IS NOT A FULL LIST.  That list is too long to put here. 

 

Q: What does the full Reg A+ Cost?

A:  We can get you started for approximately $10k.  This covers the retainer with our firm and the law firm.  This allows you to issue the Press Release as described above.  We believe that as soon as that Press Release is out there, it WILL cause money to flow to you.  Then you can pay for the rest of the process with incoming investment dollars.   The value statement of The Canna Unicorns is 1) that we are success fee oriented and get paid after investment is coming in, and 2) that we can handle the writing of the document, and manage the process at less than half the rate of the attorney group.   Clearly legal and accounting are measurable expenses, but they can be mitigated.  And because cash flow is so critical we don’t get paid until you are receiving investment dollars.

Q: How long does the full Reg A+ registration take?

A:  With a ‘clean company’ we can have the submission to the SEC in 30 days.  Currently the SEC is at about 78 days for a review.  We usually just say “120 to 180 days” depending on circumstances. 

 

Q: How do we find investors if we work together?

A: At some point in the process, we attack on multiple fronts. We have debt investors, equity investors, and we are always growing our lists.   Further, assuming that the law firm has given your company a full “green light” for the Reg A+, they will introduce your company to the investment bankers and/or broker-dealers that specialize in this kind of money raise.

 

Q: How do I get started?

A: Just give me a call or an email and we can go through where you stand, understand your goals, and identify any potential issues, or complicating factors.  Assuming that we decide to work together you will next have a conversation with the law firm we recommend and make sure that everyone is on the same page.  After that, we run hard and fast because we don’t get paid until you do.

 

CONTACT:

Robert Merrill Fletcher, ChE

213.500.7236 (EST)

Robert@TheCannaUnicorns.com