My co-founders and I recently received our Adult-use provisional cultivation license in NYS. As mentioned in a previous thread, these provisional licenses are good through 2024 and automatically convert as long as the company is compliant /in good standing with state regulators.
We spent years in the hemp world getting crushed, really just betting that our participation in the hemp pilot program would help position us for adult use licensing (which it clearly did)
Now that we’re licensed and that info is made public, we’ve had several companies reach out to partner with us or purchase the company and/or license outright. Some are clearly schemers / fly by night operations and bs offers, but still been a very interesting experience for sure. We know its the NY market, one of the last major markets coming online and the tourism and there are a lot of co’s making moves to enter.
One group though is very serious and made an offer we’ve really had to consider. They are offering $14m for the license. We can only sell 49% of the license in the first two years. After that, free to sell in full with OCM approval. So their offer was $14m for 49% today and full ownership after the 2 year period. The payment would be almost all upfront, half cash half company shares. During these 2 years we would receive 51% of the profits until the full licensed transferred over.
I wanted to come to the community for feedback;
Do you think it’s a good deal? Would you do it?
We’re obviously consulting our advisors and any relevant contacts in our networks but there’s no substitute for getting feedback direct from the community
Personally - I would see what my options of sales were in the NYC area in terms of getting products straight into storefronts and if the costs associated with it would be prohibitive. I have always considered NYC the golden goose market if you can get a strong foothold in it - if the costs associated with it would be too staggering then the other way would potentially be good. I guess it all depends on your options for getting your product in the hands of consumers.
Now I will say this…don’t consider the ‘marijuana tourism’ dollar. A lot of companies out here in CO tried to bank on that and they went down hard. I would just see what your options would be in terms of distribution before considering something like that
You just got crushed with hemp, and got blessed with a golden ticket. Pivot your entire op into the legal market and don’t even entertain people untill 2024. Get as many shops on the boarders as you can.
And if the democrats move to implement their “legalization” scheme in an attempt to stop the midterm landslide he could very well get screwed. If they got crushed in hemp, what makes you think they have the money for startup? Certainly securing retail licenses along borders would probably involve additional licenses to their cultivation license.
Do it. Don’t look back. GTFO while you can. Waste no time calculating projections etc. Everyone in CA was in your position but only to the tune of about 10% of that offering for early adopters. 90% of us are kicking ourselves for hanging on to what is now basically worthless. Take it and run
NOTE: I am referring to my type 6 in Sacramento…not the vertical I am managing in Redding
Unless you are an already established MSO you stand little chance of surviving
So you’re getting up to $7m in cash and an imaginary $7m that you may or may not be able to turn into real dollars at some point in the future.
You said “almost all up front” so I’m assuming you’re getting something like $5m up front.
Assume you can’t manage to convert your shares into cash. Especially if this is a private company. If it’s public that’s less of a concern, but be aware of lock-ups or other ways that make your paper possibly worth less.
Assume that if you CAN convert your shares into cash, they could be worth 10% or less of what they are today.
Assume they figure out how to screw you out of the remainder of the money.
Is the amount of REAL CASH MONEY that is on the table today enough to GTFO?
Then do it. Anything else you get is gravy.
Otherwise, focus on guaranteeing your payout. Or find another buyer
Honestly I’d sell, take the $7M in cash, assume the stock will be worthless, use maybe $1M of the cash to get dispensary licenses in great jurisdictions, and use another $1M to get 51% of another farmer (which you can probably do). Or just walk off into the sunset, I’d assume that’s a damn good ROI on your hemp farm even if you were getting crushed.
If you’re open to it DM me, there’s a fair chance I know the company and their negotiating tactics/etc - happy to give you some tips.
How many companies involved in legal cannabis have shares worth anything? Most of these companies go to pot, and these shares are virtually worthless. I have seen so many young people take less money/pay for the promise of ‘equity’ only to find out that the ‘equity’ ain’t worth nothing in the future. TLRY CGC, feels as if the pump has already happened. Now they slide into oblivion with shareholder value decaying every year. Maybe you get shares, and they IPO in a bull market (think SPACs) and they pump it. Right timing. But what if you are locked up for 1 year and can’t sell on the open market? Then those profits vanish. And I dont see the beginning of some new bull market starting up anytime soon…
Take more money and less shares…
