Empowering Growth: The Starting Point


Peter Daneyko

Managing Director


Peter Daneyko

Managing Director

Entrepreneurial business development executive who brings ideas and people together for the delivery of new products and services to market. The start-ups that I helped found have produced a variety of innovative applications and new businesses with measurable results. They range from downloadable marketing and educational tools to custom digital signage to on-demand apparel manufacturing. Founding partner of Whimsy Rose, a print on demand apparel brand; which has produced and sold over $20 million worth of apparel through its in-house developed production system. - https://www.whimsyrose.com/ Founded AppWare’s, creators of Deskplayer, - a marketing application design company that produced apps generating over a million downloads for brands ranging from Sony Music to Budweiser, to Marvel. Developed, and delivered customized video delivery and educational communications tools for corporations such as Deloitte Worldwide, to the Pharmaceutical industry for the on-demand delivery of accredited professional development educational courses to Physicians. New Initiatives: A co-branded community-based photo-apparel label and an On-Demand consumer profiling/persona services company. (ProfileNINJA) by http://statanalytics.ca & http://www.didanalytics.com Specialties: • Strategy for Business Development • Maximizing Sales • Analysis & Forecasting • Enterprise Sales to Senior Executives • Program Planning & Implementation • Product & Market Identification • Communication & Negotiation

Oscar Jofre

CEO and Co-Founder


Oscar Jofre

CEO and Co-Founder

Oscar is currently one of the Top 10 Global Thought Leaders in Equity Crowdfunding, a Top 5 Fintech Influencer, Top 10 Blockchain and a Top 50 InsureTech. He has published an eBook that has been downloaded in over 20 countries, and been distributed by partners worldwide. Oscar is a featured speaker on Fintech, regulated, equity crowdfunding, compliance, shareholder management, investor relations, and transparency in the USA, Australia, UK, Germany, France, Netherlands, Canada, Singapore, Indonesia and China. He speaks to audiences covering alternative finance, RegTech, insurance, banking, legal, and crowdfunding. Oscar also advises the world’s leading research, accounting, law firms and insurance companies on the impact Fintech, RegTech, LegalTech, InsurTech and OrgTech is having in their business.

Nathaniel Dodson


Dodson Legal Group

Nathaniel Dodson


Specialties: Contract Law Business Development Real Estate Syndication Investment Opportunities Wealth & Succession Planning

David Allen


Allen and Thomas

David Allen


Matthew John McNally

Managing Partner

Evolved: Tax and Advisory

Matthew John McNally

Managing Partner

Peter Daneyko 00:00

Well, good day to everybody. Wishing everyone a Happy Monday. I’m Peter Daneyko of KoreConX. We’re very excited to kick off a new edition of our online KoreSummits, Emerging Growth. For the next five days at 2pm. Eastern Standard Time, we’ll have five one hour panel discussions with industry leaders spotlighting the cannabis sector and the ecosystem around capital raises. Our panel discussions will include for the week, what should the entrepreneur about preparation for their offering, what regulations are the best fit for your company, how to attract investors, always super, super important, and trading in the secondary markets. Today’s panel discussion, the starting point is made up of a group of experts in their respective fields. We have a quarterback in the in the cannabis sector as well as a former broker dealer and financial advisor. We have a lawyer and escrow specialist and our favorite auditors and tax experts, as well as legal representation. Now to get things started, I’d like to introduce our very own Oscar Jofre, industry authority, crowdfunding author, and our CEO at KoreConX to kick off the week as our moderator for today’s session, the starting point. Over to you Oscar Jofre.


Oscar Jofre 01:30

All right. Thank you, Peter. Thank you, everyone. And happy cannabis week. I mean, it’s I just came back from New York. So I got cannabis going. I’ve been in Boxborough, Boston, Massachusetts, as you say, an event outside to then heading out to New York. And now we’re back live with our KoreSummit event. And I think this particular topic we’re going to have, I guarantee you, it’s probably the most discussions I had with everyone. I have a great opportunity. I want to get started. But before we do that, I would like to give our panelists that today could take just a minute or two to introduce themselves. Nate, let’s start with you.


Nathaniel Dodson 02:13

Sounds good. Excuse me. I am the principal managing attorney over at crowdfunding lawyers. We are exclusively securities focused lawyers. Everything from the Regulation CF and Regulation D all the way up to Reg A. And even getting well our first cannabis deal upload are up registered to the NASDAQ. So the firm started in California, and we’ve always had a big emphasis in the cannabis industry. So really excited to be here.


Oscar Jofre 02:52

Fantastic. David


David Allen 02:55

Hello, my name is David Allen. I’m a partner at Allen and Thomas. We work pretty exclusively in the capital raising and private equity broker dealer world. We have several broker dealer clients. And we recognized as we were getting into more of the crowdfunding piece of it that escrow has some particular rules around it. And we thought that a lot of broker dealers and issuers are probably not in compliance with some of the SEC rules. And so my law partner and I created a separate escrow management No, we’re not an escrow bank. But we do handle escrow for some of broker dealer clients to make sure that no one’s going to get in in trouble with with sec and broker dealers not going to get in trouble with with with FINRA for the same reasons.


Oscar Jofre 03:54

Perfect. It’s good to have you and my friend Matthew.


Matthew McNally 03:59

Let’s go. My name is Matthew McNally. I’m the managing partner of Evolve, LLC, a tax advisory and technology firm headquartered in New York City. I have a 20 year career in public accounting, advisory and technology.


Oscar Jofre 04:14

All right, thank you. So I know we’re waiting for a couple of our other colleagues to slip in here. Frank Bility, who is the managing partner Ben valetti partners, and Brian McDonnell with ArcView, the FINRA broker dealer, so but we’ll get started because you know what, it is important with them, we can cover some of their items. But the as I said, the big discussion that I had here going into this events is that there are so many people talking about accessing capital. And where it often comes to a heart stopping any of these discussions is something that we we recognized early on is to to kind of remind everyone what is needed. But let’s start with Nate. I mean, Nate, I mean, you since you’ve dealt with cannabis companies from a legal perspective, well, let’s talk about preparation items that you feel one of them is legal. They need lawyers, securities lawyers in order to use Regulation CF and Regulation A, but what else from your perspective are they needing in order to move forward?


Nathaniel Dodson 05:23

One of the most important things, especially in the United States, in the current regulatory climate, is to make sure you’re represented by local council that is making sure that you’re doing everything proper under the state laws. At the federal level, the powers that be the Attorney General’s have kind of flip flop back and forth the last couple of presidents where one says, we’re going to enforce the cannabis laws across the country. And then the next guy says, You know what, as long as you are operating legally, under state law, we’re not going to do anything. So it is really important no matter what, that you’re doing everything legal to begin with at a local level. And then really, that next step is to plan out your business plan and assemble your team as needed for really what your goals are, if you’re looking to set up a small distributor, or a larger grow operations, there’s a lot of different avenues to be in the cannabis industry, and all of which have kind of different considerations and capital needs.


Oscar Jofre 06:38

But you brought up an interesting point that actually we don’t deal with in other sectors. And I think we need to highlight them, we’ll come back to it some more is. And as I tap into Matthew, a little bit on this, you brought up the issue that they need their state lawyer, how big of an impact just to before we get too far, how big of an impact is that? When they’re a cannabis company talking to their state lawyer? I mean, they want to raise money, are you telling me certain states will restrict them from using federally regulated regulations?


Nathaniel Dodson 07:10

Well, there are licensing requirements for most of the states in the United States that allow for recreational or medical use. There are also if you are getting licensed or going through a registration process, there’s different types of disclosure of who actually owns and participates, and has voting rights in the cannabis industry companies. So it really is important to make sure that even from the get go as you’re planning through your capital raise to make sure that whatever the long term plans are, that you’re meeting all of the requirements, because at the end of the day, federal law, to a large extent, kind of guides what we do and what we can for the capital raise, but it really is the local impact of the licensing and the regulations there. Okay, that may be a limiting factor.


Oscar Jofre 08:07

Okay, interesting. Okay, because I did hear some of that related to Massachusetts, but we’ll come back to it. So Matthew, I mean, obviously, from your experience in the field from an audit, a, you know, besides getting the audit financial statements, as Nate is indicating, there may be some additional state requirements, anything from the financial side as a company prepares to do its capital raising. I mean, that’s the big thing they will want, right, I want access to capital regulation CF. Regardless, do you see anything? Is there anything provide us some insight into what the requirements are?


Matthew McNally 08:40

Well, it’s important to remember that cannabis is still, you know, illegal under the under Schedule One controlled substance act. Right? So for federal purposes, it’s illegal. Only 18 states have legalized it for recreational use and 37 states for medical reasons. So a lot of the bigger issues come down to state or state issues and what they allow, and it’s not only state by state, it’s city by city, and county by county, so they can have all different rules and all those different areas that you need to keep abreast of.


Oscar Jofre 09:18

So, so in other words, okay, so now let’s get that I mean, that’s from the use of effective, but based on, as Nate was indicating, in the capital raise, and it could have an effect from an financial point of view. Is there anything that you see hindering that process at all other than, obviously, we need audited financial statements for this capital raise, but do you see anything in there?


Matthew McNally 09:42

Nothing that’s overly concerned. It’s just, you know, it’s just a level of complexity of dealing with the different jurisdictions.


Oscar Jofre 09:48

Okay, so that’s basically more reporting requirements based on what they’ll have to do financially. And then David, I mean, obviously, we have different members. that they may be trying to get in here. But what we’ll we’ll speak about the broker dealer here shortly ArcView capital. But David, I mean, you’re the escrow provider for for the cannabis market? And how does that play into what Nate just indicated that there could be some status or any issues here with the banking site and the services you’re providing to companies? Or you’re letting the that flush out itself prior to them coming to you? Or do even consider that?


David Allen 10:30

Sure, I actually caught some of your questions, I’ve had some internet issues here. So that the the 15 C 2-4 requires that any funds that are part of a contingent raise, just sit in escrow. And what’s happening is because of the wild card processing on the crowdfunding platforms, not less than 100% of investors. And so, what we do is, we ask that the either the issuers or the broker dealers pre fund the account so that the investors are immediately reimbursed for their for the crash. Then we report back to the broker dealers, that exactly 100% of each investor is is made whole immediately.


Oscar Jofre 11:35

Sorry, so, okay, we, I think you’re in and it was cutting in and out there. You mentioned one of the regulations. So what you’re saying is that there could be a situation where, because of the regulation, and may require a company to give back the investments back to the investors, because there’s some state regulation, and you’re you are handling that component, or you’re overseeing that, that I get that correctly, or did I misunderstand?


David Allen 12:02

No, so so what we’re doing is we’re sort of filling in that that keeps this the reporting piece so that broker dealers and issuers can show that they are in compliance with the SEC rules, mandating that 100% of the investors money is sitting in escrow. So we’re not acting as an escrow bank, we’re splitting the reconciliation between the bank and the broker dealer and the issuer. And we’re also the one that reports or provides the reports, if the SEC or FINRA ever came knocking to ask about, you know, show us investors one through 10. You know, you know, what, where’s their money into the 100% of it sitting there?


Oscar Jofre 12:44

Okay, so All right. So basically, a whatever undertakings that obviously, Nate and his firm take it just in the question that you brought up Nate into all of this, that caught me by surprise is that you, I never had considered what 

Nathaniel Dodson 13:04

Let me give you a interesting example. It’s a situation that we just recently dealt with. We were working on an investment for a growing operation up in Michigan, and it was to grow. And then of course, you have the sales side of the the operations, because of the licensing requirements in Michigan, as an example. Absolutely. Everybody that had any interest in this sales side, in the dispensary side of the operations had to be disclose their personal information provided to the state, it would be publicly available, and to invest into a cannabis business, that could be a big hurdle to overcome with passive investors. So this is for being an example. We were able to structure the entire process where the investors were just putting their well, their name on the dotted line on the real estate side, but it was structured in such a way that there was this TI allowance with the leasing to allow for the sales side to get funded without having to disclose who all of these investors are 100% the only reason this structure came together was because of those state licensing requirements.


Oscar Jofre 14:29

Do you know what did that I’ve ran into that that’s a great example where yeah, if you’re using regulation CF or A, you have a few 1000 investors who wants to be disclosing that part of that but but that is where the interesting part comes in. Where you need to create a legal structure right off the beginning and having that team set it all up. And obviously it all of you have worked with a FINRA broker dealer before the role the broker dealer and I do apologize For some reason, I think everyone’s probably having a few and after a factor, because internet issues are being had by a couple of our speakers today. But the role of the broker dealer in this is working side by side with both the legal in the, the, the accounting side of it to make sure that the structure is 100%, you know, both compliant with the regulation. But you brought up an interesting point there. Nate is that it also needs to be compliant with whatever state they’re operating under just in case there’s some loophole about disclosure requirements. And I mean, have you read it? I mean, David is looks like David is also it looks like a lot of the United States today, from California to to New York, it looks like it’s just Texas, New York, that we’re, we’re, we’re we’re alive. Nobody’s cut us off yet. So let’s have some fun without them, then. No, no, just listen, I’m not all the last few speaking engagements that I’ve had in the cannabis, I’m spending a lot of time with people, I have an opportunity, I want to raise capital, I need 510 for whatever the capital requirements are. And then, you know, we talked to them, what do you need to get started. And that’s what this panel is, usually we have a person like a Frank Bility, a quarterback that actually navigates them between us to help them understand the role, the lawyer place a securities lawyer plays of the auditor, where Matthew comes in from the tax side working with, you know, the, the assurance dimension team, or, as well, the escrow provider, you know, getting an escrow in cannabis is not exactly an easy undertaking, but we’re getting that done. And then we need the federal broker dealer to perform the, you know, make the offering compliant, to make sure the ID and AML are done. But what I want to circle back a little bit more to the beginning of this conversation where Nate got it started. So you opened up our rabbit hole, me, so we’re gonna stick with it, because I want to go back with you and Matt, because it, I have to believe that whatever legal structure you’re creating, to, to make sure that these names are not having to match or anything like that, how does that affect it from anything that the company wants to do going forward. So by creating a brand new legal structure, so the investor sit here to the to the investors don’t have the same legal rights. So with there is this like an SPV kind of vehicle or, or just another vehicle that to allow to meet the regulatory requirements.


Nathaniel Dodson 17:53

And this is one of those super highly regulated areas, that it does become really important. But at all times, disclosure is the number one thing from our perspective, but secondarily, making sure that all potential loose ends are tied up to protect the investors, as well as the issuers themselves. And so as in the example that I was giving with where you have some real estate, and yeah, have the cannabis operations, there’s generally contracts in between the different entities with management, legal contracts that tie everything together, and got to make sure that really, and it’s much more heightened in this area, every connection is made consistent with the jurisdiction of the state, the local county, or even the city, all along the way, that we’re not doing anything that can put anybody at risk.


Matthew McNally 18:54

It’s also important to mention that, you know, in each state, they have different rules, based upon the ownership. So if you know, if you had your marijuana license, in your name, you’re now going to sell the business, there is potential there that the actual license won’t be there anymore. So you have to set up the structure so that, you know, maybe somebody else comes in that the owner of the current license stays on for a period of time, so you can transfer yourself off. And so and it’s different rules for each state.


Oscar Jofre 19:23

Wow. Okay. So and, Matt, that that’s a really good point there regarding the, the the rules, and you mentioned is are they when they get the licenses to an individual or to an entity or could be either or


Matthew McNally 19:38

It’s issued to the entity but the it lists all the ownership on it. So if you change ownership, more than you know, depending on the role of the state, but California has, you know, prohibits 100% transfer of your actual license. So then either one you you keep the person on the license until you broker some deal to keep them on the license until you can change the license over because you don’t want to leave time where there’s no license and you’re selling marijuana in the state.


Oscar Jofre 20:07

Okay, okay, so that’s so that’s, that’s a bit, that’s a bit of a little I’m not gonna say to big wrinkle, but it’s a wrinkle one that needs to be taken care of. So one thing is wanting access to capital M, making sure that you met the state requirements. And name. I mean, is there ever not a chance where, you know, no matter how great Reg A and Reg CF, as regulations, our company just can’t use it, or can they use it, but it’s only limited to the state only.


Nathaniel Dodson 20:44

Definitely can use it, it’s always just important to pay attention to making sure that the business itself is very legal against it that really puts everybody at risk. And to give you another example of where kind of the local laws can turn out really wonky Lake Tahoe, it actually is right in between the Nevada and California border. Both states allow for recreational cannabis to be sold. But Lake Tahoe does not allow cannabis to be sold on the Nevada side, very specific to that one little town, you cross the border game on, and there’s no restriction there. So it can be really even localized even more minute we than just the state, county, even the city.


David Allen 21:35

I also want to add that, you know, some of the things that even Oscar just brought up a little while ago, and in Nate has been talking about as well need to be part of risk disclosures in any of the securities offerings. And so, you know, we can talk all day long about properly managing and administering your company. But those risks that are inherent to the cannabis industry need to be disclosed to potential investors because they need to know what they’re getting into. And, you know, we’ve done a lot of due diligence for a lot of companies, cannabis and otherwise. And, and so and we don’t think that a lot of the risk disclosures are there. And I know it’s a sort of a light burden for regulation CF. But, you know, still, we almost insist that you need to let the entire world know that these things can happen.


Nathaniel Dodson 22:31

And I gotta say, it’s really unique in the cannabis space. Because you look at the legal industry, and every attorney kind of has their own space, it gets to securities, it’s a hyper specialized area, get to securities with a law firm, or lawyers that have experience in the cannabis space, you could probably count it on your hands, the guys that have gone through it, and understand the risk disclosures, and really those risks there. 


Oscar Jofre 23:03

Yeah, I would just, you know, it’s just something I guess I took for granted. I mean, living in Canada, we don’t have that it’s all across, but they don’t need to make those kinds of disclosure, they’re not needed. But given that the sensitivity of the fact that it’s only legal in certain states. And everybody wants it, we, there’s, I saw data set that 91% of adults want cannabis in the United States to be legalized. That’s the next step, of course. But the but the real big issue here is making sure that that extra step and I’m, you know, now that I think about some of the cannabis companies we’re working with, I think it’s just something to put back in the checklist, just hey, just go double check with your, with your securities, not your securities attorney, but  your local attorney. And and Nate, I’m gonna just come back to you again, I apologize. But you just stumbled into it. You know, throughout these events, I don’t think I ever brought that out. I feel horrible that I didn’t I live right to the regulation. I I missed a big step here. So thanks for that. So David, are you able to hear us Are you still a lot of I think he may be out of commission there again. But listen,


Matthew McNally 24:22

One important point that I don’t think a lot of people realize that may want to know this, but you know, for federal tax purposes, you’re not taxed like a regular company, you’re taxed on your, on your net profits. So you you don’t get the benefit of any expenses, which is, you know, very difficult, you know, when you’re dealing with a company, right, so you have to treat your tax, your federal tax return different than your state tax return, and then each state tax return has to be treated differently, you know, per their rules. So it’s, it’s lots of compliance issues.


Oscar Jofre 24:56

Wow. so, even when it comes to tax season, you pay more. 


Matthew McNally 25:05

A new business, right? They want a new business they want is paying federal income tax because they don’t get any benefits of their deductions.


Oscar Jofre 25:13

Wow. Okay. So that’s also so there’s, there’s well, actually man that that brings up an interesting question, does that make an audit for a company in cannabis? Is it a specialty now within the tax tax firms? Or is it it? It’s just like any other tax outside at some of the little quirks


Matthew McNally25:35

There are areas that specialize in it, but it’s it doesn’t make for all the people doesn’t make it more difficult, it makes it harder for the tax people don’t want to just do what they do the tax people, it’s difficult because you have to follow different rules for each state that you follow.


Oscar Jofre 25:49

And for each state, and therefore, because of that difficulty, it it takes a little bit longer than traditional audits normally would take. Right. Okay.


Matthew McNally 26:02

And the returns are highly scrutinized to sell as well.


Oscar Jofre 26:06

Okay. Has anybody seen any cannabis companies providing dividends? I’m just curious. I mean, you have donate? And how? And are they in there? With with dividends? Are these publicly traded or privately held? If you don’t mind me asking? I mean, we don’t need to buy by private. Okay, so we are so the private ones have fun, are finding ways to to bring your investors? No, it just, I kind of brought this up because Matt and I’ve been talking Matt is an it’s an auditor, but he also found a way to, you know, in particular with companies who were bringing in large set of investors either in Reg A, Reg CF and want to offer a dividend as another form because if I’m if I’m get this correctly, they they can they can be a debt holder, but not an equity holder. Is that why?


Nathaniel Dodson 26:57

Um, you know, we’ve we’ve structured quite a few of these deals as debt plays, where it’s really real estate based in traditionally in the cannabis area, because it was so highly scrutinized by well cut out of the Federal Reserve systems, most banks wouldn’t even touch it. It’s only we much more recently that FinCEN, which is kind of the overriding, hey, if they’re gonna cause problems in the banking world, FinCEN is kind of the ruminal investigative unit that works with the at the federal level. And it’s been more recent that they’ve said, well, as long as you’re abiding by state laws, we’re not going to expend the money to go after the cannabis industry players. So it’s much more recent. Traditionally, over the years, we’ve just done as much as possible through the real estate. And then of course, you’ve got leases, you’ve got secured debts, and those have been paying out very well over the years.


Oscar Jofre 28:02

Yeah, yeah, no, I’m actually. So finally maybe that are clean or wait for a company that that instrument that pays out a dividend. And mad this leads into you, I mean, your company is leading the way and delivering K ones digitally now. So you can disseminate that into 1000s and 1000s of individuals, where in the past it might have been a hinderance because this, I mean, people look at things, capital raising from the perspective of how much is it going to cost me before I need to capital after the fact and what work do I need to do? So I guess this is a question for you name it. It, is it? Is it easier to do a debt versus equity, if they came from one of those states that, you know, there’s there’s going to be additional hurdles when a company needs to access capital?


Nathaniel Dodson 28:57

You know, I would think it’s funny because at the end of the day, when it comes to the securities, debt and equity in terms of the process, the disclosure requirements, how it operates, really is the same until it gets excuse me into the operations, where a debt you have to pay or you’re in default, and generally with equity, you’re not in default if there’s not a dividend. So there is more flexibility. At the end of the day, maybe it is easier to sell as a debt because it’s more of a priority position. But not always because you often are capped at that interest rate versus having the upside of it’s a cash lucrative industry to be in. There’s great reasons to want to be in the profit side versus the Debt holdings. 

Oscar Jofre 29:49

I was just gonna say that it but the profit side may have hurdles as you indicated, where for whatever reason, the state may proceed EBIT or I guess maybe something we’ve never tried in, in capital raising. If you elect to invest in this company, you elect to have your name listed. You know what I mean, you have to be seen. And I think the community at large people who invest in cannabis are pretty well already out there. But I guess that’s another option that companies can consider. I mean, the, at the end of the day, I think the most important thing, I think what we’re starting to realize now is, so the process is, once again, just reminding everyone that even though no whole matter how lucrative the market is, which it is right now, for cannabis. Companies need to take steps to make sure they’re doing a compliantly, both from the operational side of their business, back to what Matt said in May, when it comes to licensing. But after that part, it’s easy to kind of pick which regulation depending on the capital race, and as maybe you just explained it from a regulators perspective, debt or equity, you’re still gonna have to do the same filing, same requirement. It’s just what it allows you from here, you know, up picking both your heads, I mean, from your experience, Matt, what what have you seen that were companies in the cannabis space, or you’ve heard that, from an accounting perspective, have failed to understand when they come to get ready for capital raising.


Matthew McNally 31:29

I mean, generally that you know, the the amount of regulations that are involved in doing all all the work, they just don’t, they cannot grasp the amount of you know, it’s a lot different than opening up a, you know, a mom and pop shop that sells doodads, compared to cannabis, you have to file massive regulations, you have to be insanely compliant. You’re extra scrutinized by the IRS and all the states because they want to see your books. And they know you’re very profitable. So they know that you have deep pockets.


David Allen 32:02

I would also add that a lot of escrow banks don’t understand that they are not processing point of sale for cannabis products. And they’re actually they’re actually a service provider for security sales, not cannabis product sales. And so we, we partner with a couple of cannabis friendly banks, who do understand there is a higher level of review, and typically higher costs, but there are some banks that specifically target the cannabis sector. And a lot of bigger banks also don’t want the headline risk. You know, they don’t they don’t want to be known as the cannabis kings in the escrow world. And you know, so they make some decisions based on that as well. But, you know, that’s one of the things that we’ve learned.


Oscar Jofre 32:52

That’s a good point. Thanks, David. I know your internet in the number four economy in the world but not so good today. Yeah, had to throw that one in there. That’s what happens when you get the best economy in the world. Are the internet is just slowing you down. This must be chopping down to 39. Eastern Standard Time. Nate, I will since you’ve done a few, you know, I’ll let you start with yours first, but give me tell me tell us some of the things that you ran into when they come to you that you’re seeing the shortfall. As for the ones that are listening today, what they can do to prepare themselves, when they speak to Nate.


Nathaniel Dodson 33:34

Anybody that comes to work with us, we really want to take our time to get to know the client and their business and really kind of their plans going forward. When it comes to doing any securities offering. It’s a very technical industry. Raising capital requires you to think through so much more than being a farmer and growing something or opening up a shop and selling something, you have to think about the minut details of when are you going to do reporting? How are you going to do banking? Where are you going to do banking, dealing with the taxes and on and on. So that’s where it kind of really what people are lacking is thinking through 100% of everything, because this is one of those few times that people have to do that before they ever get started.


Matthew McNally 34:26

You got to be you also have to be meticulous with your books and records. Every record has to be detailed. You really have to keep track of every little thing more than any other company I would say.


Oscar Jofre 34:36

Yeah. And that’s that’s what I keep hearing listening to the both of you particular. And this is so important to understand that that this is a gift to be able to do this business. That’s number one. Now you want to do capital raising the scrutiny that’s going to be in your firm is intensified. Right, both from the local regulator and The federal regulators. So to Matt’s point, I think you’re you’ve got to play, you got to be very, very detail oriented individual, find someone in your team that’s going to track everything from day one not, you know, hey, don’t worry, we’ll get it through next week, next month. This is one of those things you start right from the beginning, because it will have a material effect going forward. Now, let’s talk about some I mean, because I am dealing with some cannabis companies outside of the United States that are US based entities. Have you seen anything made from that perspective that would, you know, US company, of course, but their properties are in Africa or in the Caribbean? Because we’re starting to see Canada and South America, how does that play out from a legal perspective,


Nathaniel Dodson 35:51

It actually makes it a whole lot easier, because there’s a whole lot less of that localized regulations to even worry about. And there have been foreign stocks training on the stock exchanges in the United States dealing in the cannabis area for a long time. It is definitely a red flag that the SEC is diving even deeper into to make sure everything’s disclosed and being done properly. But at the end of the day, doing it offshore, where it’s less highly labor regulated, or just legal, is a whole lot easier to deal with, then, in these highly regulated states, which is basically the United States.


Oscar Jofre 36:34

Wow, that’s, that’s really, that’s really interesting, because most people would think because they their property is in somewhere else. And I just had a call with someone there their properties in Africa and they go Oscar, I think it’s tougher, but it’s rather interesting to hear it from this. And Matt from from an accounting. Do you see anything there? When the property is foreign? bookkeeping, all aside? Yep. Meticulous, but anything that you could see?


Matthew John McNally 37:01

Well, you have you have additional foreign filings depending on you know, ownership and where you’re doing business, you might you might have, you know, country, local city, local in that in that country, as well. So that’s a lot to deal with. Nate, I actually have a question. Does the FDA get involved in the considering that it’s foreign, being grown in the foreign nation come across does the FDA get involved there now?


Nathaniel Dodson 37:27

It just depends on where it’s getting sold at? I mean, if it’s and this does really make a big difference, Oscar to your point? And is there enough of a nexus with the United States that regulation CF or Regulation A is actually available? Or, of course, in Canada, there does need to be that US based connection, more than just filing the entity. So that would be an important thing to look into. But in terms of the FDA, there is very little likelihood that any of the Foreign Operations is shipping cannabis to the United States. So I don’t think the FDA would ever get involved with that.


Oscar Jofre 38:10

Yeah, I mean, look, and mining, traditional mining, right? Or oil and gas, the company could be out of the United States, you got your management team sales team, but your operations are in Africa or in Asia, and then you’re selling to Canadians. That’s why we buy oil. We have so much of it that we like to buy some more, but no, but but this is a in cannabis. I think this is the other part I think we’re getting, we’re getting very nationalistic in the way it operates. You could have a very fruitful business. And I’m running into a lot of them. Their operations are in other countries, and they’re selling to Europeans. And they’re selling to Canadian, this. In fact, they’re not selling anything in their local region, because it’s prohibited. But the other sides do allow it. So I think Nate nailed it from that perspective. I know David, you’re there. From the from the escrow side. Obviously, escrow plays an important role, everyone, just so you know, in particular, when you’re dealing with regulations, and regulations, regulation, a plus this has been a real DNO issue for cannabis companies having to be paid enormous fees just because they were cannabis, as we all alluded to finding a banking partner. But obviously David and his partner, Natalie have found a really simple way of solving that problem. David, from what you’ve heard here, I mean, is for you, as a as a provider sitting in the middle, are any of these things taken in consideration that you’re or does it really matter to you as long as the companies follow Reg A. Feg CF or Reg D, when they’re capital raising?


David Allen 39:50

So so when they’re when they’re capital raising you, you’re asking specifically about how escrow works in the cannabis industry and what limit rotations are there?


Oscar Jofre 40:00

Correct. Well, I’m gonna be patient would you have if any, right? You


David Allen 40:04

There are so so so we partnered with a lot of different banks, but for a cannabis company that needs an escrow account, we have to go through certain banks that are cannabis friendly. And they do charge more. And part of it is just because you know, they can just nobody else wants to deal with cannabis companies. And part of it is, you know, there is an additional reviews at tier one, tier two and tier three review. So even if you’re selling securities in a cannabis company, there’s still a higher heightened review of the accounts. And so some of it is justified, but not all of it. And so, you know, we’ve sort of broken down, you know, where, where those additional fees are coming from, we’ve negotiated some pretty good rates for cannabis companies. But you’re right. I think a lot of these, a lot of the banks that are will allow cannabis companies know that they sort of have them over a barrel, and they will charge horrendous fees. So that’s just a reality of it. You know, this is sort of like the Wild West, it’s getting there to be a little bit more of a mainstream type of industry. And But until that happens, I think a lot of the banks, sort of, you know, see, see a target.


Oscar Jofre 41:19

Yeah. No money before it’s too late. Yeah, yep. Okay, so All right. Well, I mean, look, I know, our, I think the technical difficulties for other counterparts, it didn’t change the subject matter, really, you know. The starting point, I think, in this particular subject matter, I, you know, of all the different types of sectors we’ve dealt with, this one’s got a little bit of a bump that needs to cross before anything about money raising comes in. We know they need capital, that’s not the issue. The issue here, though, is that anybody can give you advice on the regulations. But as Nate said, if you need to bring Nate along with your state lawyer, to bring them together to come up with a way that best compliantly in both ways. Otherwise, you’re just spinning your circles and getting nowhere. Because you know, this just for me, it’s just, I love I love these talks, because, you know, it’s like everything else, you keep learning something new every day, and you pass it on. And this is one of those things that I don’t know why I didn’t think of it at the beginning. I should have, because it, we dealt with it in Canada in the early days, who couldn’t do what. I guess it’s just, we’ve had such a free market with this, that you don’t think about it anymore, but we got to go back to it. All right. So in closing, I mean, let’s start with you, David would really good reminders from an escrow what you would like companies that already come to the league on the audit component from an ethical to be prepared when creating the raft core account?


David Allen 43:05

Well, two things and one of them, one of them is cannabis specific, and the other one is just capital raising specific, you know, that, we think that the SEC is going to be coming down pretty hard on issuers and broker dealers for not complying with with SEC rules, and that’s across the entire crowdfunding industry. But for a cannabis, they need to be prepared that they are looked at the same way as other industries like gambling or guns, and you know, any of those other, you know, very sensitive type topics. And so, even though cannabis is becoming more mainstream in the US, and even if even if at the federal level, it all gets approved, I think for quite some time, the general public is still going to look at it as as sort of taboo or the same way as so you know, gambling or guns or tobacco or any other type of of issuance. So I don’t know that, that the lessening of any of the regulations is going to help tremendously, you know, so when it comes time to find an escrow bank that’s actually willing to work with that issuer. So that’s just a you might want to start early to to find your escrow bank.


Oscar Jofre 44:20

No, that’s a good point. We’ve had many companies where they started the escrow late and then they could launch Alright Matt, Matthew.


Matthew McNally 44:31

No, I would suggest to anybody looking to you know, start a start a cannabis farm or looking for capital that you really, you know, work with a you know, an accounting firm that understands both startup area, the Reg A area and the cannabis area.


Nathaniel Dodson 44:50

I you know, I tell most of our clients, all we need to start with is a dream and some drive. When it does come to cannabis. There’s a lot more planning behind it. it. So I can point people in the right direction. But at the end of the day, it’s going to come down to planning, really beginning to end capital to success of what it takes to be successful. And it’s really going to be regulations licensing and everything at the local level.


Oscar Jofre 45:19

Know that, and definitely on the on the US side. And I know we got some people here that are from Canada, and how they can use the regulations getting started, I think the US lawyer when using regulation, a plus we’ll look at those things as well, just because you’re Canadian doesn’t necessarily mean they won’t want to live to unveil the rest of, of your operations. And I think this was, you know, as we get cannabis week started off, I think this just comment, it’s going to that discussion is going to get even more bubbly as we start talking about the regulations in the in the next day or so. But I think one of the things that I’m going to encourage that discussions to have is to add more that narrative Nate that the you brought up, I gotta be honest with you, I didn’t. The the importance of that is so big, because it no matter how big, shiny light I have here, you got to deal with this big one over here, right? And not to determine whether you’ll use Reg A or Reg CF, or whatever it is, or because you got to get through this first. And that requires thought, you know, and strategic and people who understand both sides of the fence. So I’m definitely going to bring it up to our next panel too, that we have. But for everyone else, thank you again for joining us at here at KoreSummit, cannabis week, from Monday to Friday, your our next panel is going to be on the legal side, we’re going to talk about the people who are going to help once you do make it past the legals and the accounting. The individuals that help you bring the awareness, investor acquisition, and that is also going through a massive undertaking, you know, change in a way the approach would work six months ago, three months ago, does not work again. And then of course, we’re going to talk about the holy grail of everything in the private markets, which is secondary market trading. We now have it available. How many companies will take advantage of that? Does everybody need to go public? Maybe? Yes, maybe? No. The point is, we’re it’s going to be a full week. So I want to thank Nate and Matthew, my apologies. And David, for joining us and to our friend Nate Dodson. And, Brian, I know you couldn’t make it. You know, hopefully we’ll get internet access wherever you may be today. For the rest of you. Thank you so much. Have a wonderful afternoon. We’ll see you in the remaining part of the week. Thank you. Thank you


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