Investors in the booming cannabis sector in the US have the potential to liquify holdings in fast-growing firms courtesy of the secondary trading platform offered by Rialto Markets.
According to Forbes, as more states legalize the sale and cultivation of cannabis, the legal market is set to generate $43 billion by 2025.
Much of the new investment is coming from equity crowdfunding.
CEO and co-founder of the award-winning broker-dealer Rialto Markets, Shari Noonan, says the opportunity to liquify shareholdings – as and when possible or profitable to do so – in the rising numbers of private companies in the field is proving a benefit.
Speaking to Dan Humiston, host of the MJBulls: Raising Cannabis Capital podcast, she revealed the benefits of using its alternative trading system (ATS).
She told the podcast: “With most companies you’re tying the investor to the exit strategy of the corporation
“Companies are staying private longer and raising a lot more money privately. Often, by the time they hit the public markets a lot of that growth has gone.
“To have a secondary market where you’re divorcing the exit strategy of the corporation from the exit strategy of the investor, you’re really giving the investor the opportunity to monetize that investment based on their timetable, not the corporate one. That is quite powerful.”
The ATS empowers the buying and selling of shares in private companies by operating in a similar way to the Nasdaq and NYSE for public company trading.
This includes equity crowdfunded companies in a much more regulated environment.
Rialto Markets has been employed by cannabis companies seeking equity crowdfunding to use its infrastructure to co-ordinate the raise – offering more competitive rates to the established cannabis investment portals – and integrating it into their websites.
They include a $1 million Regulation CF raise by Massachusetts-based Grow Space Orange. It builds agricultural facilities to allow licensed cannabis cultivation.
Adds Shari Noonan: “The way we do that differently to the portals is through a self-hosted solution – so it looks like the company’s website. We’re just managing everything behind the scenes.
“We bring together a whole eco-system. We work with a legal filing firm, if you need escrow we can provide facilities, we have payment rails for credit card processing and if you need an auditor we can arrange that and bring all those service providers together.
“We also plug into the portals should you want to plug into those investor networks as well.”