VIA Folio, the private securities division of Folio Investments Inc., has decided to support capital formation for certain businesses engaged in the cannabis sector. We reached this decision because we believe it will advance our goal of democratizing the private securities sector and will help fund companies that cannot tap traditional venture capital. We began exploring this idea after broker-dealers contacted us about our willingness to support the fundraising efforts of certain cannabis-related businesses.
Prior to reaching a decision, we studied and carefully considered the complex legal landscape and public policy issues surrounding the growing legalization movement for cannabis. Any use of cannabis is currently illegal under federal law. However, with November’s election results, medicinal use of cannabis is now permitted under state law in 28 states and the District of Columbia, a region compromising more than 60% of the U.S. population. Adult recreational use of cannabis is now legal in seven states and the District of Columbia, an area comprising more than 20% of the U.S. population. We believe that the effort to decriminalize the use and sale of cannabis will continue and is consistent with public policy reforms seeking to mitigate the harmful impact that cannabis-related arrests and imprisonments have, including on minority communities, where they have had a disproportionate effect.
We have decided to begin our work in this area by supporting two categories of companies whose activities are legal under both state and federal law. Those companies are (1) pharmaceutical companies engaged in research under waivers granted by the Drug Enforcement Administration; and (2) companies that do not “touch the plant” but provide products or services to businesses that do.
We will actively assess developments in this area as they occur and may decide to expand the categories of companies that we have decided to support. We therefore invite companies in categories not described above, specifically companies involved in sales of cannabis for both medical and recreational uses, to contact us to discuss ways that we might assist them in the future.