Mainvest offers locally-owned cannabis brands an accessible and community-focused way to raise capital, and provides everyday investors with the rare ability to invest directly into cannabis companies. However, there are some differences in how cannabis businesses process Revenue Sharing Note repayments on Mainvest.
Cannabis repayments occur annually in January, not quarterly, and are based on the prior year's revenue. Cannabis businesses are still expected to provide quarterly updates to keep investors informed about the progress of their business.
Here are a few examples:
If a business raised funds in 2022, but did not generate any revenue in 2022, no repayment would be owed in 2023. If the business started generating revenue in 2023, the first repayment would be owed in January 2024.
If a business raised funds in 2021 and generated revenue in 2021, they would owe their first repayment in January 2022 based on revenue generated between the end of their raise and December 31, 2021.
Due to federal regulations, cannabis repayments cannot be processed through the Mainvest platform. Instead, Mainvest provides calculations for investor repayment amounts and contact information for the businesses. Businesses are expected to repay investors off-platform, which can include writing checks or digital payments. Mainvest works with businesses to ensure that investors are repaid in a timely manner.
Note that this information is relevant only for businesses utilizing the Revenue Sharing Note. If a cannabis business raised funds on an equity investment vehicle, please refer to the subscription agreement or reach out to the business directly for more information.
It's important to note that Mainvest does not provide tax, legal, or accounting advice. We recommend that investors consult with their own professionals to understand the tax implications of their investments.