A craft cannabis grower startup in Franklin Park is a virtual unicorn in Illinois.
While most of the 88 licensed craft growers in the state have been unable to attract enough capital to open, Cannect Wellness announced Tuesday that it has raised $7.5 million to begin operations this summer.
Cannect did it by selling shares of ownership, or equity, which craft growers are allowed to do.
Cannabis retail stores, on the other hand, are prohibited from selling shares of ownership until they become operational. That restriction was meant to prevent minority owners from selling out to wealthy white investors.
Equity fundraising was key to getting Cannect started, co-founder and COO David Michaud said.
“It preserves cash,” Michaud said. “It provided us with liquidity and to not have immediate debt.”
How they did it, he hopes, will help fellow startups.
Cannect Wellness had an advantage in that its founders had business experience and money. Michaud is a corporate attorney, and co-founder and CEO Gabe Singal worked in health care technology business development. They had previously formed a company to invest in medical office buildings. They teamed up with Danual Berkley, an African American Springfield firefighter, U.S. Army veteran and children’s author, who qualified for licensing advantages as a social equity licensee.
The state’s social equity efforts are aimed at people who either live in an area with high poverty or high cannabis arrest rates, or who have a past…
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