Documentation, Business Planning, Raising Capital & Team Creation

September 22, 2017 Cobo Hall Detroit, MI

Organizational Documents

What do I need to send to the State? Articles of Organization (Form through the state)

Procedure: ◦ Submit proper form to state and wait for

return documents. ◦ Receive your assigned ID number ◦ Use ID Number for any additional filings (i.e.

to get an FEIN)

What is included in my Articles of Organization?• Name of Corporation (Use LARA Entity Search)

• Name a Resident Agent • Resident Agent is the individual that will accept service of a

lawsuit if you were ever to be sued.

• Name of Organizers

• Number of Shares (Corporations Only)

• Can include other items like dissolution agreements or distribution of assets.

Operating Agreements What is an Operating Agreement?

◦ Clearly lays out the way a business will be structured and operated. ◦ Governing document for business disputes.

What should it include? ◦ Choice of Law Provision ◦ Choice of Forum Provision ◦ Arbitration clause ◦ Triggers- What if someone commits a crime? What if they leave the

business? ◦ Buy out provisions

Investors- Raising Capital Investors

• Get Funding for Equity- trade off

• Begins with Angel Investors

• Venture Capital Infusion by Venture Capital Firm as business grows

• Both Angel investor and venture capital groups forming for cannabis industry

• Private Equity- as businesses mature

• Give Up Control of Business

• Identifying the amount of money your project needs

• Identifying what you are willing to give up for that money

• Money plus

• Loans vs. Equity

• Proof of Funds

Pitching Investors Pitch Deck • Gives a glimpse of business

• No need for NDA at this point • Take with you • Prefer face to face with small group

• Print out vs PowerPoint- Do not email • Set agenda day before with investors

• Overview of financials • Executive Summary • Business plan without the nuts and bolts

NDA/ENRA Pitch went well….

• Sign Non-Disclosure or Exclusive Negotiating Rights Agreement

• Both allow for confidential information to be exchanged

• ENRA is NDA on steroids, basically getting engaged and working towards a formal agreement.

• ENRA allows for negotiations just between the parties, while a general NDA may allow outside negotiations

Convertible Loans/Interest • Investors loan company money

• Get paid back a certain percentage

• Reserve the right to convert some of the debt to equity

• This can be important especially if out of state investors though no out of state restrictions for Michigan

• Used to get better terms for the loan ie lower interest rate

Equipment and Real Estate Financing• Loans/Mortgages

• Hard to get with new business

• Might have to personally guarantee

• Could do option of Land Contract

• Finance equipment through equipment dealers

Thank you!

(248) 541-2600 cannabislegalgroup.com