DIME BAG FINANCING

All sorts of potential investors jumped into the pot space when interest in gaining a Marihuana Medical Purposes Regulations licence (MMPR), the government-issued licence that allows businesses to grow pot, started heating up. Often, the expected valuations and budgets were significantly out of line with reality. Booth, for one, saw it all first hand when he was approached to enter the space. The two men who wanted to start the business were looking for money to create a $5-million greenhouse. The problem was that their greenhouse concept wouldn’t work, and that Booth determined it would cost twice as much as budgeted. He went ahead anyway.

If there’s one thing that is clear in this industry, it’s that raising capital hasn’t been a significant hurdle for most companies. Despite some of Booth’s friends raising their eyebrows when he entered the pot business, it wasn’t hard to raise further capital. “I jumped into it head over heels and I raised some seed money,” he says. “My ex-wife was one of the first in, so that was good — my circle of love.” So far, he has raised $12 million, much of it from business connections in Edmonton.

Robert Stewart, whose WFS Pharmagreen Inc. operates in Mission, B.C., under the brand name Canna Companion, says he’s raised $1.5 million, no doubt helped by the fact he inked an endorsement deal with pothead comedian Tommy Chong. “Sure, raising money is a huge challenge because I’m tired of it,” he jokes. “But people are excited about the space and recognize we have the icon of icons. It is like opening a church and having Jesus, Buddha and Mohammed show up for the break party.”

Initially, Booth says, some of his “conservative Alberta friends,” were reluctant to invest in the cannabis business. But that’s changed. “Not too long ago, we asked if they wanted to put money in and they were all excited about it,” he says. “Even the most conservative guys will have something to say about medical cannabis.”

Similarly, Bruce Linton started reading about the potential of medical marijuana as an emerging play. His friends tried to dissuade him. “I approached several people and said, ‘I think this is going to be a good business, would you like to be involved?’”