Sending Updates To Our Membership

Four times a year we send out an update to our entire membership. Today we sent the second update for 2023.

As a reminder, we operate a syndicate (or group of investors) that evaluate and opt to invest on a deal-by-deal basis. While members will receive confidential updates about the companies they choose to invest in, this update is sent to the entire membership. This is a chance for us to communicate with everyone who has shown interest in our thesis and investment strategy.

We typically follow this format:
1. Top of Mind - This is an opportunity for our Syndicate Lead to address the most impactful current topic for the syndicate.

2. Portfolio Updates - Quick hits on the companies we have invested in (concentrating mostly on publicly available information).

3. Informative Cannabis Industry Reads - I highlight a handful of articles from the last 2-3 months that cast a wide net as it relates to the cannabis consumer, removing the stigma, criminal justice and social equity and more. I try to be mindful that most people in our membership are not obsessing about cannabis everyday like we are.

This update’s Top of Mind focuses on revisiting our investment strategy. After 2 years, we thought it was important to maintain transparency with our investors and broaden membership. We wanted to share an excerpt from a this most recent update that fires us up:

“We are undeterred by the recent challenges that face the industry. This risk is built-in. We maintain strong conviction about our investment strategy, albeit, at a slower pace than originally anticipated. But most importantly, we have the strongest conviction in our portfolio companies who all find themselves in strong positions during challenging times.”

Trustworthy Advisors for Early Stage Cannabis Companies

Our advisory practice is focused on early stage companies. Our collective experiences punch above their weight class for this group of companies. We offer our services to a wide range of industry sectors from cultivation to software companies and everything in between.

We like to work with companies who value our time just as much as we value theirs. After spending a combined 15 years in the cannabis industry, here are a few things that make us different.

1. You can trust us.

2. We’re effective, respectful communicators.

3. We’re results-driven strategic thinkers.

4. We’re professionals. We don’t put up with nonsense.

5. We care about facts backed by data.

Please contact us at the link the comments section if you'd like to discuss working with us.

Real Ones Only.

No Nonsense.

Cannabis Companies Planning to Raise Capital from Equity Investors in 2023

Some thoughts for cannabis companies planning to raise capital from equity investors in 2023.

1. Have a plan to not only deploy the capital but also include in that plan a set of established KPIs to achieve from this capital raise. A pie chart on a slide is no longer good enough.

2. Validate the assumptions behind your plan. Be conservative with these assumptions. Raising capital to fuel unattainable growth leads to failure in the cannabis industry. THIS IS NOT TECH. If you’d like to see some examples…you’re not paying attention.

3. Ask yourself, is this investment needed? Does it add immediate shareholder value? If it does, plow forward and be relentless. If not, I suggest waiting out another 6-12 months and reassessing. If you are one of the few who planned ahead or have a plan for 12-18 months that is cash burn neutral, why raise money now?

4. If you don’t have customers who love at least one of your products or otherwise can demonstrate revenue growth, go back to the drawing board and build something that has one or the other. This isn’t 2019 (or 2021).

5. Stop giving equity to advisors and service providers so early on. Unless this advisor comes with an investment in your business or a significant asset to contribute to the business, do your best to avoid compensating your team of service providers in equity. And if you do, make sure that equity vests or is otherwise granted over a period of no less than 4 years. They shouldn’t get better deals than your future employees will.

Cannabis Banking Myths from Cannabis Banking Expert Peter Su

Cannabis will be everywhere. All industries will touch cannabis. If you work in cannabis in any capacity, you need to surround yourself with experts within specific industries. This allows you to operate and make strategic business decisions based on factual information and accurate data, as opposed to hear-say and myths.

One industry that is most frequently in the limelight as it relates to cannabis is the banking industry. And for banking we turn to Peter Su, who has solidified himself as a cannabis banking expert over years of hustle both in and out of the cannabis industry. Check out the article he penned dispelling the 5 most common myths in cannabis banking via Marijuana Moment.

Myth 1: Cannabis companies can’t get a bank account
Myth 2: Cannabis companies can only bank with credit unions
Myth 3: Cannabis businesses transact in cash only
Myth 4: Cannabis businesses can’t get a loan from a traditional bank or credit union
Myth 5: Banks are making bank off banking bud

Keeping An Eye On The Carolinas

The Receptive Capital Syndicate is one of only a few investment groups that is focused exclusively on the East Coast cannabis markets. We seek to invest in entrepreneurs with enough grit to launch and grow in these early-stage markets.

Here is what everyone is talking about:
- Massachusetts just surpassed $4B in total sales since adult-use began.
- The tri-state crown jewel of New Jersey, New York and Connecticut are all coming online right now.
- Florida, Pennsylvania and Maryland have working medical markets and are moving towards adult use (Maryland is currently in first place for this race).

But we’re also keeping our eyes on the states that no one is talking about, like North Carolina and South Carolina. North Carolina and South Carolina? Yes, you read that correctly. The Carolinas are getting closer to the right side of history.