What’s a business in the medical marijuana industry supposed to do when it comes time to raise capital and, therefore, must disclose its risk factors? Well, it can answer honestly:
Some of the business activities of some of our customers, while believed to be compliant with applicable state law, are illegal under federal law. If our customers are closed by law enforcement authorities, it will materially and adversely affect our business.
The medicinal cannabis industry is currently conducted in the 15 states, plus the District of Columbia, that have passed laws either decriminalizing or legalizing the medicinal use of cannabis. However, under United States federal law, the possession, use, cultivation, and transfer of cannabis is illegal. The federal, and in some cases state, law enforcement authorities have frequently closed down dispensaries and investigated and/or closed physician offices that provide medicinal cannabis recommendations. To the extent that an affected dispensary or physician office is a customer of ours, it will affect our revenue, and to the extent that it has an impact on new dispensaries and physician offices entering the medicinal cannabis industry, it would have a material affect on our business and operations.