Expert Shares Advice For Cannabis Companies Looking to Access The U.S. Capital Markets
Marcum recently completed the work on the first special purpose acquisition company (SPAC) in the cannabis space, and is handling an IPO for a cannabis oil extractor in California that intends to list on the Canadian Securities Exchange (CSE).
In response to one of the questions, Bukzin shared his best advice for cannabis companies looking to access US capital markets.
Question: What advice do you have for cannabis companies looking to access capital markets in the U.S.?
David Bukzin (Marcum’s vice chairman): “In many respects, the exchanges don’t care if you have a lawyer. They don’t care if you have an investment banker. They care about one thing, and the most important thing—that your numbers are accurate and what you’re reporting to investors is true and correct, or at least materially true and correct. You’ve got to build a reporting infrastructure to get that right. There’s nothing worse than a company going public [and] having problems with their numbers. Then they’ve got real problems.
What I call a seller’s due diligence [is also important]. When you’re in a company that needs capital—whether you’re private or public—you’re always selling. You’ve got to have seller’s due diligence in mind. You should have a data room with all your pertinent documents [and] the ability to turn around accurate financials in a timely fashion.
All the other aspects of corporate governance are [also] important—an actively involved board of directors. The various committees—whether it’s an audit committee, a compensation committee, a governance committee. And look 18 months to two years out to what a young company wants to be when it grows up, and start laying in the framework for the future. We’re working with a bunch of oil extractors on the West Coast that are strongly considering—and at least one of them is—lining up to go public on the CSE, and you can certainly see the difference between some of the founders, which are more on the entrepreneurial side of the business, as opposed to the guys that come in—the adults in the room, the board level people and CEOs and chief operating officers—that really bring a discipline to the company to be able to get them to the next level. Some of these companies are growing so fast, it’s like riding a bucking bronco—it’s a challenge.”