A cannabis investment platform, Global Cannabis Capital (GCC), is seeking to raise some funds toward expansion by selling cryptocurrency security tokens to investors.
This comes when cannabis users worldwide are lighting up to celebrate the annual “420” festival in honor of cannabis; a different strategy is ongoing behind the scenes where investment in the industry is being promoted with crypto tokens. The aim is to shift away from traditional funding to a more contemporary one.
Accordingly, GCC plans to raise more capital using crypto tokens than the traditional fiat share offering, as Bloomberg reported on April 18.
The Bloomberg report disclosed that the firm is about to offer the tokens to the public on the Ethereum blockchain . In contrast to most cryptocurrencies, the tokens used in the offerings are pegged to other assets or equities of the issuer. This shields it from the market volatility of the crypto industry.
What the Funds are Meant to Serve
The new development would, without a doubt, set precedence for other cannabis firms, especially those operating in countries where there are limits on financial institutions’ support for the cannabis industry.
Meanwhile, the tokens are different from other crypto coins in that they are designed to provide investors with the means to expand their assets into unicorns within the same industry. With the tokens, investors can own equity in several startups and help accelerate their growth.
The GCC will issue capital stocks that come in the form of 100,000 tokens of specific crypto coins. Through this, the funds will be able to sell about 6% of their equity over the next couple of years.
Blockchain Security Tokens Over IPO
In the first place, the GCC had planned to venture into the IPO space but decided to change direction and go with the blockchain security token offering. The event is scheduled to occur in Luxembourg, which has a friendly marijuana regulation and efficiently issues blockchain technology securities once the conditions are met.
It was reported that more than a hundred investors had shown an interest in purchasing some of the tokens on offer in a presale event in the last month, where the company is valued at 425 million.
The report also revealed that the company would soon sell tokens on the Ethereum network, which shows its equity to every interested investor, instead of selling on the traditional IPO platform.
As a result, GCC has invested a total of $700,000 in about 28 cannabis firms in Latin America through providing services to newly established startups in exchange for their equity or, in some cases, buying stakes in companies with prospects for progress.
The GCC will use the proceeds from the token offerings to expand its portfolio to an estimated 40 companies later in the year. The focus on the expansion would be on Canada, Switzerland, and some U.S. states with friendly cannabis laws like Colorado and California.
The cannabis industry is now the latest entry into the crypto industry.
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