Crowdfunding platform PledgeMe has been overwhelmed by demand from investors into a medicinal cannabis company. How? Why? Find out in today's cheat sheet.
What's all this then?
PledgeMe, the crowdfunding website where you can donate to a band's debut record, or help get an artisanal homemade coffee roaster off the ground, has a new big hit. A huge, smoky hit in fact, that has left the website coughing and spluttering.
The hit is Waiapu Investments, who are running an equity campaign for Hikurangi Cannabis. That's the company that has been high profile recently in their attempts to get New Zealand's medicinal cannabis industry going.
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Medicinal cannabis? Who wants to invest in drugs?
Uh, heaps and heaps of people. The campaign was originally aiming for $2 million. So far they've raised more than from locals and had more than $2.2 million pledged by other investors last night. Moreover, the traffic load has been so heavy that PledgeMe has crashed two nights in a row. That's unheard of for PledgeMe, who reported in a blog post that they've had more interest in this campaign than any other they've ever hosted. In fact, there has been so much interest, they've had to close the portal on the website, and are taking pledges through a Google doc instead.
But why invest in this? How is anyone going to make any money here?
Medicinal cannabis is being described as a 'sunrise' industry – in potential investment returns, think of it as like the opposite of investing in a video store. There are potentially massive markets opening up, particularly in the USA. Some of New Zealand's foremost economists, Shamubeel Eaqub and Gareth Morgan (oh, for the days when he was just a very good economist) believe it could be a booming industry for regions that are struggling, like Northland and the East Coast. As well as that, there could be serious export potential, at a time when other countries are starting to take the lead. Honestly, you'd be mad not to get into this market. (Note – for legal reasons, nobody should take this as investment advice. In fact probably nobody should take any advice from me seriously at all.)
When I was in school a talking giraffe told me drugs were illegal. Is that not still the case?
Yes, yes it is. And because they are illegal, nobody ever does them. But this project is different – Hikurangi Cannabis has applied for a Medical Cannabis Cultivation Licence, which means they'll be allowed to grow approved low THC strains of cannabis, for use in clinical trials for medicinal cannabis products. Despite the stupid joke in the first paragraph, this is almost certainly not going to be big green joints being passed around hospital wards. It would likely instead be turned into products like (but not necessarily) Sativex, a mouth spray.
Won't this all just end up as McWeed? Why should people be excited about a company that's just going to turn into just another corporate behemoth?
Waiapu Investments is a little bit different to most companies it seems. They've been pulling in investments from rural villages all over the East Coast, and have a fundamentally tikanga Māori based approach to their business. Basically, they want to be the economic saviours of towns like Ruatoria, by employing locals in well–paying, skilled jobs. And look, not to put too fine a point on it, but there's some serious expertise in growing cannabis in that part of the country.
Right! I'm sold. Take my money.
Hold on, it's not a perfect investment by any stretch. There are no guarantees about if and when you'll get a dividend back. The returns on investment might be terrible. There might be sudden law changes that suddenly make medicinal cannabis completely unviable, or the bill aimed at opening up further to medicinal cannabis might fail to pass through Parliament. There's no such thing as a completely safe investment, but from a risk–management perspective, this one is much more dangerous than others. If you are just looking for a way of modestly growing some money, this is probably not a good thing to back.
But if you're looking for something that could potentially have huge returns, and could help change at least a small part of the world, Hikurangi Cannabis could be just the ticket. For example, Stuff had a story the other day about two elderly East Coasters who put a grand in savings into the business, with the expectation that the shares would be held and then divvied up among their 20 great grandchildren, because they really believe it will one day pay off.
The last word:
The minimum investment is $50, and no, it doesn't come with a bag.
Alex Brae is a staff writer for The Spinoff
