Marijuana Private Placements: Don't Skimp on Risk Factors
Many of our clients that are raising money ask us to draft or review private placement memorandums (“PPMs“) for private securities offerings in their cannabis companies and/or ancillary cannabis companies. The goal of a PPM is to describe the company raising the money, its management, how much money is being raised, how the money received will be used, and the risks involved in the investment. All of these things are important, but the description of the risk factors is the most important section for protection under federal and state securities laws. This is when our clients often cringe because we always encourage full disclosure of all risk factors associated with the marijuana-related business seeking investment. As much as our clients may want to soften the blow for potential investors regarding the cannabis company’s potential volatility, they need to be as up-front and honest as possible about the criminal and business realities of cannabis investments. Should they fail to do...
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