By Matthew Roman

1. Documentation, Business Planning,
Raising Capital & Team Creation
BY: MATTHEW ROMAN J.D./M.B.A.
June 9th Detroit, MI

2. Organizational Documents

3. What do I need to send to the State?
Articles of Organization (Form through the state)
Procedure:
◦ Submit proper form to state and wait for return
documents.
◦ Receive your assigned ID number
◦ Use ID Number for any additional filings (i.e. to get
an FEIN)

4. What is included in my Articles of Organization?
• Name of Corporation (Use LARA Entity Search)
• Name a Resident Agent
• Resident Agent is the individual that will accept service of a lawsuit if
you were ever to be sued.
• Name of Organizers
• Number of Shares (Corporations Only)
• Can include other items like dissolution agreements or distribution
of assets.

5. Operating Agreements
What is an Operating Agreement?
◦ Clearly lays out the way a business will be structured and operated.
◦ Governing document for business disputes.
What should it include?
◦ Choice of Law Provision
◦ Choice of Forum Provision
◦ Arbitration clause
◦ Triggers- What if someone commits a crime? What if they leave the business?
◦ Buy out provisions

6. Investors- Raising Capital
Investors
• Get Funding for Equity- trade off
• Begins with Angel Investors
• Venture Capital Infusion by Venture Capital Firm as business grows
• Both Angel investor and venture capital groups forming for
cannabis industry
• Private Equity- as businesses mature
• Give Up Control of Business

7. Identifying Investors
• Identifying the amount of money your project needs
• Identifying what you are willing to give up for that money
• Money plus
• Loans vs. Equity
• Proof of Funds

8. Pitching Investors
Pitch Deck
• Gives a glimpse of business
• No need for NDA at this point
• Take with you
• Prefer face to face with small group
• Print out vs PowerPoint-Do not email
• Set agenda day before with investors
• Overview of financials
• Executive Summary
• Business plan without the nuts and bolts

9. NDA/ENRA
Pitch went well….
• Sign Non-Disclosure or Exclusive Negotiating Rights Agreement
• Both allow for confidential information to be exchanged
• ENRA is NDA on steroids, basically getting engaged and working towards a formal agreement.
• ENRA allows for negotiations just between the parties, while a general NDA may allow outside
negotiations

10. Convertible Loans/Interest
• Investors loan company money
• Get paid back a certain percentage
• Reserve the right to convert some of the debt to equity
• This can be important especially if out of state investors though no out of state
restrictions for Michigan
• Used to get better terms for the loan ie lower interest rate

11. Equipment and Real Estate Financing
• Loans/Mortgages
• Hard to get with new business
• Might have to personally guarantee
• Could do option of Land Contract
• Finance equipment through equipment dealers

12. Business Plans and Applications
• Business Plan Fundamentals
• Principals of Capitalization and Financing
• Importance Of Operations Manuals

13. Executive Summary
• First Page – Snapshot of Opportunity
• Gives a quick description of the business
•Gives key financial figures i.e., returns, investment, and equity
stake, all in a quick and easy to read format
• Basically, why investors should give you money in a nutshell!

14. Problem
• Introduction
• What problem is this business solving?
• And how is the problem going to be solved?

15. Business Description
• How the business solves the problem
• General description of business
• General brief overview
• Grow Example

16. Product Description
• Describes products in detail and business offers
• Very important, can be a differentiator
• Gets more specific than business description
• Pricing structures are included
• Key features of products offered

17. Market Overview
• Market Breakdown- extremely important to understand market
• Average customer/user
• Ways business will capitalize on the market
• Estimate market size and how large an industry is
v Again, it is extremely important to understand market
• For cannabis, dropping prices are key to understanding whether a business is
viable

18. Competition
• Important to analyze competition
• SWOT analysis – Strength, Weakness, Opportunities, Threats
• How will business deal with competition and carve out its own niche?
Something unique? Price? Quality?
• Must understand competition to plan accordingly and anticipate next
moves

19. Initial Rollout and Promotion
How will business begin?
• Timeline?
• What will be done to market the business?
• Are there phases of marketing?
• Benchmarks to be hit?
• What is the marketing budget?

20. Capitalization
•Who is putting in the money to start
•Important for business to be properly capitalized or else wont be successful
•Focus on previously mentioned ways to raise money

21. Financial Summary
• What type of capital is required?
• What type of returns are expected?
• Value of the business
• What type of equity can an investor expect to get for their investment
• What is the breakeven point?
• Budget
• Burn Rate

22. Liquidity
• Important to have money set aside to run business until break even
• State may look at this to insure business does not go under if problems at the
beginning
• Suggest having 1 year of operating expenses in the bank ready to be deployed

23. Team Creation
• Important to have the right team
• Management can make or break a business
• Important to show in business plan each
manager’s role and experience
vBetter to have a B idea with A management
than an A idea with B management
• Gives credibility when business has an
accomplished team.

24. Thank you!
(248) 541-2600 cannabislegalgroup.com