Cannabis investors embrace New York as the capital center of the universe
Cannabis investors embrace New York, In early July the New York State Department of Financial Services issued a memo giving guidance to banking institutions hesitant to provide financial services to the medical marijuana industry. The memo, signed by the state’s Superintendent of Financial Services, Maria T. Vullo encouraged banks and credit unions to open relationships with legal cannabis businesses in spite of the drug’s Schedule I status under the Controlled Substances Act, under federal law.
According to Vullo, New York will not impose any regulatory action on financial institutions that choose to support the medical marijuana sector, so long as both parties continue to operate within the law.
Gov. Andrew Cuomo backed the department’s decision, echoing their support for New York’s medical marijuana and hemp industries. “The ability to establish a banking relationship is a challenge that legal industries face unlike no other,” Cuomo said in a statement released by his office. “As the federal government continues to sow discord surrounding the medical marijuana and industrial hemp businesses, New York has made significant progress in creating a supportive economic development and regulatory landscape for these companies.”
It’s a no-brainer decision for New York, as Vullo so-much-as admits in the department’s memo when she writes of the state’s mission to provide sustainable economic development for all businesses. And as Cuomo now pushes to legalize recreational cannabis, may be what separates New York’s marijuana experiment from recent failures in California and Oregon.
“I think it’s going to be important because it’s New York,” said Paul Rosen, Chairman, and CEO of Tidal Royalty and a man who knows his way around the cannabis industry. He’s also the Director and Chair of the Audit Committee for iAnthus Capital Management as well as the former President and CEO of Cronos Group. And that’s just a sampling of his cannabis résumé.
“Is it going to be the innovation hub of global cannabis? There’s a lot of countries that are going to say they deserve that mantle,” continued Rosen. “I see New York State as being a very important jurisdiction because of its scale. To some degree, it’s the center of the capital universe. As New York goes, I would say the rest of the nation follows.”
“The business proposition is pretty straightforward.”
Paul Rosen knows a thing or two about the cannabis industry, having invested in the space on the ground floor. A lawyer by trade, Rosen steered some of the industry’s most significant companies in their early years, including In The Zone Produce and the aforementioned Cronos Group. He’s a Managing Partner at Breakwater Venture Capital and holds board memberships and advisory positions as well. Most recently, he oversaw Tidal Royalty’s debut on the Canadian Securities Exchange.
Rosen, though, considers himself more of an entrepreneur than an investor. And it’s as an entrepreneur that he sees an opportunity for growth in the U.S. cannabis market.
“The more I expose myself to the U.S. cannabis industry, partly by being on the board of iAnthus the last couple of years but also by making trips across several U.S. states that have cannabis programs, I was compelled by the opportunity to put the startup hat back on and to initiate Tidal Royalty,” Rosen said enthusiastically. “We’re now in a unique spot to provide non-diluted capital to the U.S cannabis industry. Tidal is everything I’ve learned in the last six years expressed into one surgical product.”
According to Rosen, Tidal Royalty is an ambitious project, one in which he hopes to develop the premier royalty financing company for the U.S. cannabis industry. Modeled after similar companies in the mining industry, Rosen considers Tidal to be unique among its peers. The key, said Rosen, is non-dilutive capital.
“The business proposition is pretty straightforward,” Rosen recalled. “Once we have found an operator and a jurisdiction and a business class that we like we’re prepared to put in meaningful amounts of capital —$5 million and up.”
He continued: “And in exchange for capital, we will tie ourselves to the top-line revenue that we help create. It gives the operators who are dilution-phobic the opportunity to run their company without massively expanding their shareholder base because we do not take shares per se. Also, we’re not charging interest per se because there are no accrued arrear interest payments pending the operation creating revenue.” Cannabis investors embrace New York
Moreover, Rosen noted that, according to him, another key to Tidal’s success is their diversified portfolio of exposure.
Cannabis investors embrace New York