The legality of marijuana-related companies is an issue that plagues the conventional banking system. Since banks are not willing to take these businesses on as clients, alternative investing methods and making payments are necessary. The Luxembourg-based Global Cannabis Capital (GCC) is raising funds for its cannabis-focused endeavors through a security token offering, which will take place on the Ethereum blockchain.
Regulations in Luxembourg are pro-marijuana and open to the issuance of securities using blockchain technology. Last month, the company held a pre-sale in which 100 investors pledged to purchase tokens and value the firm at $25 million. You can choose the Auto-trading bot as a reputable trading platform for cryptocurrency trading.
Cannabis Firm To Raise Funds Via Crypto
Global Cannabis Capital (GCC) sells tokens on the Ethereum blockchain platform. GCC will start selling tokens on the Ethereum blockchain platform to generate capital through a crypto-based IPO. Global Cannabis Capital has invested $700,000 in 28 cannabis companies in Latin America.
It buys shares in promising companies in exchange for equity. The proceeds from the token offering will be used to expand its portfolio. Currently, GCC is based in Switzerland but will expand to Canada and the US states of Colorado and California.
The company plans to sell 100,000 tokens to private investors. It will sell 6% of its equity over three years. The company originally intended to launch an IPO and reverse public offering in Canada but has decided to go with a security token offering in Luxembourg, where regulations are more favorable for issuing securities via the blockchain. The company plans to sell tokens backed by equity and user assets.
The issuer’s property is tokenized securities.
Tokenized securities are digitally-based investments in the assets of issuers. Tokens represent equal ownership of the company’s equity or property. The US Securities and Exchange Commission has initiated proceedings to regulate the tokenized securities market. The pending order will determine whether the Boston Security Token Exchange will list and trade tokenized securities. The underlying asset is the property or fairness of the issuer.
To increase liquidity, You can convert assets into digital tokens, such as equity. These securities may be personal or business assets. In the latter case, the tokens are used by investors to purchase the business’s goods and services. For example, a 50,000-dollar loan could result in 500,000 security tokens worth 0.0002%.
As the underlying assets remain digital, investors could choose to buy equity tokens on the stock exchange. Likewise, investment funds could be tokenized, with each token representing an investor’s ownership interest in the investment fund.
The legality of raising funds for the cannabis industry
While marijuana is legal in 33 states, federal law still prohibits its use. Because of this, traditional banks are hesitant to provide financing for cannabis businesses. Cannabis companies are turning to alternative sources for funding, including sale-leaseback transactions with banks.
These transactions can provide companies with capital not available through traditional banking. Cannabis companies can also use payment networks to connect with credit unions, state-chartered banks, and other financial institutions.
Another advantage of cryptocurrency is security. It can help dispensaries reduce the amount of cash they must carry. Consumers can convert it to crypto using their mobile devices with digital currency. Additionally, some dispensaries already accept cryptocurrencies in addition to cash.
By accepting cryptocurrencies alongside cash, cannabis businesses could use less cash to keep their funds safer. Because the cannabis industry is illegal in most places, thieves target cannabis businesses.
Bitcoin (BTC) Legality
The use of bitcoin by a cannabis firm is an obvious way to boost its legitimacy. During its brief history, it used cryptocurrency to buy illegal drugs. But now, the cannabis industry sees bitcoin as a valuable alternative to traditional banking systems.
The marijuana industry is hoping that the use of bitcoin will encourage other industries to adopt it. Bankcard Brokers’ blog discusses the benefits of bitcoin for this industry. Some of these benefits include its anonymity, availability in high-risk industries, and the ability to reverse transactions.
Even though cannabis is legal in 37 states and the District of Columbia, banking for the industry has proven to be a challenge. Federal law prohibits the sale of marijuana, and using cash could result in the money being deemed laundered. Because of this, banks, payment processors, and credit card companies are wary of exposing themselves to the liability associated with lawsuits. Fortunately, there are several options available to cannabis firms.