Pubdate: Thu, 21 Jul 2016
Source: Portland Mercury (OR)
Column: Cannabuzz
Copyright: 2016 The Portland Mercury
Author: Josh Jardine


Potfolio. Get It?

POP QUIZ! Remember last week when we talked about how cool it was 
that banks are full-on supporters and cheerleaders for cannabis businesses?

Trick question. Actually, last week I wrote about the exact opposite 
of that. It turns out that obtaining and keeping even a simple 
checking account is difficult beyond measure for legal cannabis 
enterprises. I didn't even touch on how impossible it is for a canna 
business to get funding from a traditional bank. It was sort of a 
bummer column, actually.

So where does that leave an honest, hardworking pot businessperson 
when he or she needs to raise some dough? Selling product on the 
black market to fund the transition into the regulated market is one 
option, albeit a really, really terrible one. There are 
nontraditional funding sources I've written about, too, such as the 
ArcView Shark Tank model.

Okay. What about crowdfunding?

As you've no doubt gleaned from your Facebook feed, crowdfunding is a 
viable way to get cash for your idea or project by asking a wide 
swath of people-i.e., the "crowd" part-to each give a portion of what 
your total financial goal is. Often, incentives are provided to 
funders based on the amount they give. This model is particularly 
popular with musicians and bands, allowing them to raise the money 
for a recording project or tour van, and they're able to pay back in 
the form of signed merch, a private concert, or sex with the drummer. 
(Kidding. They should pay you to sleep with the beat monkey.)

Another avenue is a CPO, and not the sexually ambiguous gold-plated 
character from Star Wars. A Community Public Offering gives local 
businesses an option to avoid national banks altogether, and endorse 
and support alternative funding mechanisms. This differs from 
donation-based crowdfunding such as Kickstarter and Indiegogo, 
because CPO investors get their money back plus interest; 
additionally, most online crowdfunding services have restrictions on 
supporting cannabis-based endeavors. I know, big shock.

The first cannabis-related business I've seen take advantage of the 
CPO format is local startup Smuggle Portland, a specialty online 
retail store. They don't sell cannabis, but rather most anything else 
you might need to enjoy it, including handmade glass pipes, high-end 
vaporizers, hemp body products, and other items that don't have rasta 
rainbow lions stamped on them. The majority of Smuggle Portland's 
items are made here in Oregon.

As a way to fund their transition from website to brick-and-mortar 
flagship storefront, the folks at Smuggle Portland are offering 
investors "notes" at $500 each, at a minimum of two and maximum of 
five per individual investor. They began on June 1 and will continue 
to raise money until May 2017, with a goal of raising a total of 
$250,000. They won't access the capital (i.e., spend any money) until 
they've reached a minimum of $50,000. Investors receive an 
interest-only payment of five percent annually on their notes, and 
the notes mature and are due three years from the closing date.

Smuggle Portland points out that the local ancillary market 
surrounding cannabis-meaning the typical stuff that head shops 
sell-is somewhere around $400 million a year. That's a helluva lot of 
rolling papers and bongs, but speaking as someone with an entire 
cabinet filled with all forms of vaporizers, rolling papers, bongs, 
pipes, chillums, and one-hitters, I can verify that stoners like to 
shop. (And hoard, but we aren't going to cover that topic this week. 
We may never cover it.)

Are there risks? (Are you high?) As with any investment opportunity, 
or tryst with a drummer, the answer is of course. Example: If Trump 
gets elected, the recreational use of cannabis in Oregon could 
possibly be reversed, probably shortly before our life-ending nuclear 
exchange with China. And if Hillary gets the gig (and lightens the 
fuck up), wholesale national legalization of cannabis could maybe 
bring in players like Amazon, in which case you'll be getting your 
quarter of Raspberry Kush delivered by drone two hours after placing 
your order. Point being, I'm a cannabis columnist, not a 
clairvoyant-and I'm definitely not an investment advisor, so you 
should probably consult with someone with financial acumen before 
spending your loot.
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MAP posted-by: Jay Bergstrom