Foreign Investment in Marijuana Businesses
In addition to my work on corporate, finance, and transactional issues with marijuana-related businesses, I also work with my firms foreign direct investment group. We have been getting a lot more interest recently about foreign investment into the U.S. cannabis industry, so todays post will be a brief primer on some of the legal issues involved in this tricky space. As would be expected, much of this interest is from Canada, Spain, Israel, The Netherlands and Germany, with a bit from Croatia, Chile and China as well.
What does foreign direct investment mean? In general, foreign direct investment (FDI) refers to any type of cross-border transaction where a company or investor from Country A invests money in a company located in Country B. It generally doesnt refer to dumping money broadly into stocks and bonds it is specifically about a concentrated single-enterprise investment.
FDI exists in several forms. Foreign investors can start a new company and can finance and build it from the ground up. They can participate in a joint venture with U.S. partners. They can wholly or partially acquire a U.S. business. They can also take a lighter touch, where they provide primarily branding and process support while having U.S. parties take on the bulk of the financial risk the basic franchise model.
State Cannabis FDI Issues. In the marijuana industry, we have already seen large FDI projects in cannabis ancillary services. Foreign investors have opened up domestic companies for the manufacture and import of cultivation equipment like grow lights and hydroponic equipment, processing equipment like automated …