This past week, True Leaf Medicine International Ltd. (CSE: MJ) (FSE: TLA) (OTCQB: TRLFF), announced it had closed on CDN $14 million in a cross border crowdfunding offer that saw participants by investors in both the US and Canada. True Leaf raised CND $10 million from US investors utilizing Reg A+ six weeks after the US Securities and Exchange Commission (SEC) qualified the offering. Reg A+ investors purchased 14,285,715 common shares at a price of CDN $0.70 per share, with a minimum investment of 500 shares per investor. Shares were sold to both public retail investors as well as traditional accredited and institutional investors.
FlashFunders, part of Boustead Securities, listed the Reg A+ offering in the US. CrowdfundX assisted in the promotion of the offering. Approximately 339 investors participated in the Reg A+ offering with an average investment amount of CDN $12,727 and a mean of C$29,500.
Keith Moore, Chief Executive Officer of Boustead, said he always believed True Leaf had the ingredients for a successful Reg A+. The combination of a compelling product in the fast emerging Cannabis sector heightened investor interest.
Simultaneously, True Leaf raised over CDN $4 million in a Canadian private placement selling 5,788,078 common shares at a price of CDN $0.70 per share to Canadian investors only. The Canadian concurrent accredited investor and offering memorandum (OM) offering had approximately 195 investors participate with an average investment amount of CDN $6,202 and a mean of CDN $20,800. The securities issued pursuant to the Canadian offering are subject to a statutory hold period of four months and one day.
With the offering fully closed, True Leaf is the first Canadian cannabis related company to have qualified a Reg A+ offering with the SEC. The company is a reporting issuer in Canada and listed on the Canadian Securities Exchange and quoted on the OTCQB.
Alixe Cormick, the securities attorney who handled the cross border securities sale, told Crowdfund Insider;
“A successful Regulation A offering is a team effort. True Leaf had a solid team and outside support from the CSE. It also helped that True Leaf is involved in a rapidly growing industry with strong investor interest on both sides of the border.”
True Leaf is an interesting company. The business has two main operating divisions: True Leaf Medicine Inc. and True Leaf Pet Inc. True Leaf Pet is an established business that offers hemp based products for pets that are both THC and CBD free (so no stoned pets).
True Leaf Medicine was created in 2013 to provide Cannabis for both recreational and medical use. As many people know, Canada will fully legalize Marijuana usage across the country in 2018. True Leaf has been granted approval to build out a Marijuana grow facility by Health Canada. The facility is located in Lumby, British Columbia, Canada. True Leaf has applied for a license to provide Cannabis to the Canadian market and it is currently in a holding pattern to hear from the public authorities which have been working through the approval process.
Currently there are 89 licensed producers in Canada (Ontario leads with 48) that may provide Cannabis for medical use. Last year, Health Canada indicated it would speed up the approval process and since that time more producers are receiving approval as interest in Marijuana cultivation grows.
It has been reported that Canadians spent CDN $6.2 billion on Cannabis in 2015 – an amount similar to wine consumed. An estimated 4.9 million people used 698 metric tons of Marijuana – before recreational use has become fully legalized and in a country with a population of 37 million. Some people believe there is a risk that producers will not be able to keep up with demand once recreational use kicks in towards the end of the summer. Tax revenue from regulated Marijuana is expected to be about CDN $450 million.
In the end, legal Marijuana production and consumption is poised to become a far bigger business than it is already. Legal cultivation is expected to remove production from the grips of organized crime while providing a new source of tax revenue. If federal legalization takes place in the US, companies like True Leaf may be able to expand their market dramatically. Yes, that is a big if in the case of the current administration, but most everyone agrees that medical marijuana makes sense and no one wants it controlled by criminals.
For investors in True Leaf, much hope is being placed that the company will receive regulatory approval and thus revenues will increase. If for some reason True Leaf is denied a license, the company may still be able to provide cultivation services for another licensed provider. Either way, with money in the bank from the new funding round the future looks promising for the young company. The share price of True Leaf has been range bound for the past 52 weeks but license approval could move the shares higher.
Darcy Bomford, founder and Chief Executive Officer of True Leaf, said they had always wanted to provide the opportunity for people who use their products a chance to benefit from the growth of the company.
“Regulation A+ gave us this opportunity. We believe the proceeds from this offering should put us in an excellent position to execute our business plan and accelerate our growth.”
[clickToTweet tweet=”Regulation A+ gave us this opportunity. We believe the proceeds from this offering should put us in an excellent position to execute our business plan and accelerate our growth #RegA+ #Crowdfunding” quote=”Regulation A+ gave us this opportunity. We believe the proceeds from this offering should put us in an excellent position to execute our business plan and accelerate our growth #RegA+ #Crowdfunding”]
Have a crowdfunding offering you'd like to share? Submit an offering for consideration using our Submit a Tip form and we may share it on our site!