By most recent estimates, the medical marijuana business is generating at least $4.5 billion a year in revenue. Naturally, many people want to cultivate their own opportunities in this ever growing business.
Now that Pennsylvania has become the latest state to authorize medical marijuana, many people will look to invest in this industry. Some businesses in this industry may try to raise capital by having a Reg. D offering. Before investing in such an opportunity, it is important to read the “fine print” in any statutory or regulatory scheme on the subject.
Pennsylvania, for example, will require a criminal history record check (through the State Police and FBI) “of the principals [and] financial backers . . . .” The stated purpose of such a check is to determine the “fitness and suitability” of the principals and financial backers to serve in those capacities. The criminal background check does not apply, however, to an owner of securities of a publicly traded company as long as the owner of securities is not “substantially involved” in the operations of the business.
So what does this all mean? For those of you looking for investors, you should do your own legwork on all potential investors in your venture. For those of you looking to invest in this smoldering industry, you need not apply if you have a criminal background, especially one involving the sale of controlled substances.
There are many opportunities in this industry. But ownership or financial backing of such a business in Pennsylvania comes at a price. Before you buy in, make sure you are willing to pay the price.