Capital Raising

Key Takeaways from Benzinga 2022


After a few days in the Miami sun — well, actually, in the air-conditioned exhibition spaces of the Fontainebleau hotel — the Burns & Levinson team is happy to report that the 2022 Benzinga Cannabis Capital Conference was a great success.

Our Cannabis Business & Law Advisory Group was well represented by Frank A. Segall, Scott Moskol, Bryan Natale, and myself – Max Borg. We had the opportunity to connect with many of our fantastic clients throughout the industry and to meet many key industry participants we hope to work with soon.

Benzinga was a concentrated gathering of many – if not most – of the key players throughout the cannabis industry, from the largest investors in the space to founders and CEOs of the largest cannabis companies in the world, to activists, politicians, consultants, advisors, professionals and many others.

Before discussing my five biggest takeaways from the conference, I want to briefly reflect on the experience of the event itself. The passion and enthusiasm for this rapidly growing industry could be felt throughout the conference. It was a fantastic networking and educational experience, and people seemed to be having FUN! I wonder if it was a coincidence the … Keep reading

Scott Moskol, Burns & Levinson Cannabis Advisory Group


Scott Moskol, Burns & Levinson Cannabis Advisory Group

This March, NECANN returned to Boston after a pandemic-related hiatus with a three-day in-person show. I was fortunate enough to be asked to moderate a panel with Tina Sbrega of Lighthouse Biz Solutions and Cathy Corby Iannuzzelli of Kindtap on “Aligning Cannabis and CPG Consumer Experiences with Streamlined Payment Methods.” It was a sunny 70-degree day in Boston and spring was in the air. It was a refreshing feeling of renewal – NECANN was revitalized, as were all the attendees ready to enjoy an in-person event. Here are my favorite experiences and key takeaways from the conference:

  • This was the first all-live, in-person panel I’ve spoken on since February 2020. During the pandemic, I’ve embraced virtual opportunities, but it felt fantastic to return to speaking in front of a live and engaged audience.
  • I was glad to see longtime friends, colleagues, familiar industry friends, and of course our clients. Everyone had the networking bug, and the conference was buzzing with energy as attendees eagerly exchanged ideas.
  • The exhibition hall was packed – both with exhibitors and attendees. It was great to see so many local businesses that had survived and thrived the past two years, despite the toll of
… Keep reading
Scott Moskol, Burns & Levinson Cannabis Advisory Group


Scott Moskol, Burns & Levinson Cannabis Advisory Group

Readers, welcome back to the CannaBusiness Advisory blog! It has been a busy last few months as we took a short hiatus from publishing weekly posts. We first launched CannaBusiness Advisory in July 2017, and late last year we hit pause to re-focus our content and manage some large initiatives in our firm’s cannabis business and law advisory practice. Burns & Levinson’s 2021 Annual State of the Cannabis Industry Conference was our biggest and most successful event since we kicked off the conference series five years ago. This was our first in-person cannabis event in Boston since the beginning of the pandemic, and our team was proud to have nearly 200 in-person attendees (vaccinations were required), 60 virtual attendees, 23 expert speakers, and countless connections made. We are hard at work planning our 2022 conference, and in the meantime you can revisit last years’ panels on our YouTube channel.

The spring season is a time of renewal and revitalization. Just as NECANN held its first live Boston event this past weekend, reinvigorating the local cannabis community with the possibilities of the future, we are excited to see where future blog posts take us and our readers with respect to … Keep reading

CannaBusiness Advisory Spotlight William Schreier


CannaBusiness Advisory Spotlight William Schreier

The CannaBusiness Advisory Spotlight Series features expert perspectives from Burns & Levinson clients and contacts who are blazing new trails in the cannabis market.

This week we spotlight William Schreier, Principal and COO of KreditForce.

From your corner of the cannabis industry, what’s the single greatest challenge?

Like many emerging industries, the legal cannabis industry faces various challenges in raising capital efficiently and at attractive terms. The difficulty is even more pronounced in the early stages of a business’s life cycle. Founders, friends and family, and other angel-type investors often provide initial seed capital for the start-up phase. But most businesses exhaust this initial capital well before reaching stability and gaining access to traditional banks or other institutional financing. The vast majority of traditional financial institutions are still unwilling to lend to most aspects of the legal cannabis industry, leaving many cannabis-related businesses (CRBs) with few options to raise non-dilutive debt capital in modest size (e.g., < $20m) just as they are accelerating into their critical growth phase.

How does your business solve issues related to this challenge?

KreditForce LLC is an independent merchant bank dedicated to legal cannabis and related industries that are highly regulated. We … Keep reading

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Cannabis Capital Markets in New York: M&A Deals and Capital Raises Are Skyrocketing


 

When New York became the 15th state to legalize recreational cannabis on March 31, 2021, it opened one of the largest cannabis markets globally. Not surprisingly, the state’s capital raises and M&A activity in the cannabis space have meteorically accelerated following the legislature’s legalization of adult-use cannabis.

Gov. Andrew Cuomo signed into law the New York State Marijuana Regulation and Taxation Act (MRTA) to legalize recreational use of marijuana for adults over the age of 21, although the recreational market in New York will take longer to bloom. The state’s timeline for opening recreational cannabis dispensaries was originally expected to take at least 18 months, but this projection may be further delayed due to an apparent legislative impasse over who should lead the new Office of Cannabis Management and the Cannabis Control Board, which were created under the MRTA to regulate New York’s legal cannabis industry.

Nonetheless, the enthusiasm of the capital markets cannot be contained. A recent graph from Viridian Capital Advisors tracks year-to-date capital raises and M&A deals with New York-based companies as either acquirers or targets:

As noted by Viridian, both capital raises and M&A transactions have skyrocketed to record levels since New York … Keep reading

SPACs – Hedging Risks in Light of SEC’s Urge for Market Slowdown


Special purpose acquisition companies (SPACs), or “blank check” companies, have been one of the most popular investments and investment vehicles over the past year – an alarming 308 SPACs have gone public since the start of 2021. In particular, SPACs have played a major role in supporting the marijuana funding boom since the cannabis industry faced a drought in late 2019. In just the first three months of this year, three SPAC initial public offerings have totaled over $570 million.

However, signals glaring from the U.S. Securities Exchange Commission (SEC) have attempted to slow down the momentum of the SPAC market. A few of these public statements so far this year include:

  • A public statement in March 2021, by Paul Munter, Chief Accountant of the SEC, highlighting the complexities encompassed by the trustworthiness of the SPAC financial reporting, governance and quality of audits.
  • A public statement on April 8, 2021, by John Coates, Director of the SEC’s Division of Corporation Finance, indicating that SPAC’s compliance with disclosure and filing requirements are in the close purview of the staff, and underscores legal liability corresponding to SPAC disclosures once a target is acquired.
  • A public statement made on April 12, 2021,
… Keep reading
Recent Federal Cannabis Cases Involving Raising Capital


 

Federal securities regulators recently obtained judgments in two enforcement actions brought in federal court in California and Illinois involving cannabis-related businesses raising capital. At a high level, the recent trend we have observed in these recent securities enforcement actions is the general emphasis, as we would expect, on (i) accuracy and completeness of material disclosures to investors, (ii) investor solicitation activities, including use of unregistered broker-dealers by issuers, and (iii) properly conducting compliant securities offerings.   

1. SEC v. Geoffrey J. Thompson, No. 1:20-cv-05205 (N.D. Ill. Jan. 20, 2021)

Geoffrey Thompson, a repeat securities law violator, and his company Covalent Collective, Inc., a supposed cannabis company, allegedly conducted numerous offerings of unregistered securities from 2014 to 2019, ultimately raising more than $19 million from approximately 500 investors. The Securities and Exchange Commission (SEC) alleged that Thompson diverted over $2.7 million of funds from investors while serving as CEO of Covalent Collective, a Canadian corporation operating out of Longmont, Colorado.

Among other allegations, the SEC alleged that investors were lured in by Covalent’s use of unregistered broker-dealers; an investor relations firm; a call center maintained by Fortress Legacy LLC, another of Thompson’s companies; and other fraudulent investor-facing solicitations, including audio … Keep reading