How to Secure Cannabis Business Funding
With the new licensing pending under the Michigan Medical Marijuana Facilities Licensing Act, many entrepreneurs are crafting their business plans, working out how to get a Business Loan, and planning how they’re going to make an impact within the industry. The one factor that is consistently seen is the need to raise capital. In other words, the car is built it just needs the gas to get out of the garage. Many aspiring cannabis business owners find themselves perplexed at this point in the process. In order to gain traction and secure the financing you need, a road map can be extremely beneficial to ensure a smooth process. So finding a secured business line of credit is important for your business to grow and thrive in this industry.
Business Plan
The first thing you want to do is to make sure your business plan is accurate and thorough. This is often why many people decide to work with business plan writers phoenix to ensure that all the details can be double checked before being sent off. These details include estimating your needed capital for the business with a certain degree of certainty. Investors want to know you have a game plan and have thought the details through. You may wish to use something like the financial management software from Holland Parker in order to help you with planning and forecasting, as well as generating reports so that you can make informed decisions about where to take your business in the future.
Pitch Deck
Once the business plan is created, you should create a pitch deck. A pitch deck is a presentation that you can give to potential investors that gives them a window into your business plan. It is something that gives a general overview of your objectives, how you will execute those objectives, as well as capital needed for the project.
Meeting with Investors
Once your pitch deck is complete, next you want to schedule a meeting with your investors to present. At this meeting, you will provide them with information and they will most likely ask questions about your plan and it’s feasibility. Remember, it is a delicate dance when letting them in on sensitive information if they are not under a non discourse agreement as you do not want to give away the farm. One of the most important parts of this presentation is presenting them with the proposed equity breakdown and being able to defend your position.
Craft an Agreement
If the investors are interested after the initial pitch, the next step is to enter an exclusive negotiating rights agreement. I consider this he engaged but not married part of the deal. Both parties agree to exclusively negotiate with each other to move towards a partnership. Usually, a non disclosure agreement is included to insure both parties sensitive information is protected from dissemination. The ENRA has a time frame in which a deal must be struck or it expires and he parties are free to negotiate with other people if they choose.
Enter a Formal Partnership
Once the ENRA period is complete, the terms of the deal worked out, the next step is to enter into a formal partnership. This will include setting up the entities as well as operating agreements. Once the partnership is formed and the documents created, the funding of the project will begin and the company begins operating. At Cannabis Legal Group we can help you with every step of this process.
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