Cannabis firms turn to Republic for fundraising under crowdfunding scrutiny

LOS ANGELES– Republic, a relatively new source of lower-level direct investing for businesses, has become a popular platform for cannabis companies seeking capital. At least 18 cannabis firms have launched campaigns on the platform, which offers access to lower-level investors who may not be able to invest five or six figures.

However, listing on Republic isn’t easy, as the U.S. Securities and Exchange Commission (SEC) scrutinizes companies under its “Regulation Crowdfunding” guidelines. To gain access, businesses must disclose months of documentation, paperwork, and auditing, and be fully transparent with their financials.

But, despite the high bar to entry, more cannabis businesses are turning to Republic as traditional fundraising avenues continue to tighten. CanEx Delivery, a Southern California company billing itself as the first marijuana delivery operator to get listed on the platform, took around five months of disclosure work with the SEC and Republic before launching its fundraising campaign in February.

Shannon Bitzer, the COO of CanEx, said that crowdfunding campaigns that many cannabis companies have launched aren’t as transparent for investors as Republic, and that the platform offers vetted businesses with revenue and valuations. He added that Republic takes up to 3-5% equity in a company that successfully raises at least $25,000, with a limit of roughly $1.25 million that can be raised per round.

Republic has proved to be a fruitful platform for cannabis businesses. In 2018, Women Grow co-founder Jane West raised over $700,000 from 3,430 investors in a campaign for her lifestyle brand.