CannaCrowd is a Cannabis-oriented offshoot of Reg CF platform GridShare, offering low-minimum investments in cannabis and hemp-related startups and open to all investors. Current selection is limited, but cannabis is a "growing" niche worth watching as CannaCrowd hopefully expands their selection (and improves their website). For now there are better choices for investor looking at cannabis and hemp startups.
- Low investment minimums
- Open to all investors
- No fees for investors
- Startup investments are already inherently risky and illiquid, and additional uncertainty around cannabis industry adds to that risk
- Low selection of offerings (only 1 as of this writing)
- Website is sparse (and as of this writing is not running over https), and includes some sloppy copy/paste directly from the GridShare site
- Sparse investor presentations
While there have been a sprinkling of cannabis-related offerings on other crowdfunding platforms, CannaCrowd is one of a growing crop (ha!) of niche platforms oriented specifically around cannabis-related investments. CannaCrowd is an offshoot of Title III Funding Portal GridShare, founded and operated by Jack Jacobs and Jon Norling, both attorneys and supporters of the renewable energy and cannabis industries.
Types of investments CannaCrowd offers
CannaCrowd offers investments in startups and growth companies in the cannabis and hemp industry. As of this writing there is only one available offering, a Hemp magazine.
What do you get when investing with CannaCrowd?
Details vary by investment, though in their information for issuers, CannaCrowd suggests they offer both debt and equity investments. With Reg CF investments, investors are issued securities directly by the issuing company, rather than via a special-purpose entity (SPE) like an LLC.
CannaCrowd fee structure
CannaCrowd does not charge any fees directly to investors. They charge offering companies a range of fees associated with listing their offerings, as well as 5% of the capital raised as a success fee (or $5,000, whichever is greater -- and since the maximum raise under Reg CF is $107,000, that means the fee will always be at least $5,000).
Potential returns and cashflow
Investments on CannaCrowd are high-risk investments in startups. Except under very limited circumstances, the investment must be held for at least 12 months, with minimal expectation of any market after that period. Most startup investments lose some or all of their value.
Breadth of offerings on CannaCrowd
As might be expected for a niche platform, selection is limited. As of this writing there is only one open investment.
Regulatory framework and due diligence expectations
CannaCrowd (via GridShare) is an SEC registered Title III Funding Portal, which means they are subject to a range of rules and obligations around investor education and due diligence. All companies offering investments on CannaCrowd will have been through background checks of key officers and owners, and there are clear links provided to the relevant SEC filings made by the offering company. Prospective investors also have access to online forums to talk with other investors, and an online channel for asking questions of the company raising funds (and viewing answers of prior questions from others).