ARCVIEW CAPITAL, LLC RISK DISCLOSURES RELATING TO INVESTMENTS IN THE CANNABIS AND CANNABIS-RELATED INDUSTRIESInvestments in the cannabis and cannabis-related industries carry numerous risks that you must be aware of before deciding to invest. This document identifies and explains those risks, though it is by no means a comprehensive survey of all possible risks related to your potential investment. We encourage you to speak with your own advisors prior to investing any money in any of the opportunities available through Arcview Capital. If you have specific questions relating to the nature of a particular risk, we are happy to discuss the matter further. Please feel free to send an email to firstname.lastname@example.org with your question or concern and we will respond.
LEGAL AND REGULATORY RISKS OF INVESTING IN CANNABIS AND CANNABIS-RELATED INDUSTRIESA. FEDERAL LAW AND REGULATION The possession, use, cultivation, transfer, manufacture, distribution or dispensing of marijuana is illegal under United States Federal Law (See: The Controlled Substances Act, 21 U.S.A 801). Marijuana, THC (the psychoactive agent in cannabis that causes people to “get high”), and Cannabis are designated a Schedule 1 controlled substance under the CSA. Companies that engage in the cannabis industry and individuals investing in a cannabis industry could be subject to federal criminal prosecution which could include civil fines and other criminal penalties. Cannabis companies, including dispensaries, grow operators, manufacturers, and other cannabis related businesses, have been subject to federal and even state investigation or even closed. A change in Federal policy resulting in Federal enforcement could have a materially adverse impact on such businesses that in turn could result in partial or total loss of your investment. Although many states have legalized medical and or recreational use and sale of marijuana, not all states have. In addition, the Federal government has not yet legalized its use or sale. The uncertainty around Federal legalization creates an ongoing risk for all cannabis (marijuana/THC) businesses. More vigorous federal enforcement or material adverse changes in federal policy can adversely impact marijuana and THC businesses. Because of the current state of the Federal Laws governing the cannabis industry, companies who are mainly regulated at the federal level generally will not do business with cannabis companies. For example, most banks will not transact or loan to cannabis companies. While there is no rule that says they cannot do business with a cannabis company, because cannabis is deemed illegal under federal law, a bank doing business with a cannabis company would have reporting obligations that could create issues for it. Consequently, most banks will simply not do business in the sector. This limits a cannabis company’s ability to get financing and conduct everyday banking transactions. These issues may also negatively affect your investment. B. STATE AND LOCAL REGULATION Each state regulates marijuana and cannabis differently. Some states have made cannabis legal for recreational use, others have made it legal only for medicinal use and require doctors’ prescriptions, and still others continue to regulate cannabis as an illegal drug subject to criminal and civil penalties in the event one is convicted of violating a particular state’s criminal laws addressing cannabis. While Arcview will conduct due diligence on issuers to assess whether an issuer is operating in accordance with the rules and regulations of a particular jurisdiction, Arcview will not render an opinion as to whether an issuer has complied with all requirements of that jurisdiction. Further, any results of such due diligence shared with potential investors does not constitute a legal opinion, and should not be relied on as such, as to whether an issuer is operating in accordance with all applicable rules, laws, and regulations of a particular jurisdiction. If an issuer appears to be in compliance with a State’s regulations applicable generally to it, investors must also consider how such rules, regulations, and laws may impact the issuer’s business and, in turn, your investment in that issuer. These issues include, but are not limited to:
ECONOMIC AND INVESTMENT RISKS OF INVESTING IN CANNABIS AND CANNABIS-RELATED INDUSTRIESAs with any investment, investments in cannabis or cannabis-related industries carry risks that an investor must be made aware of before they choose to invest their money. These risks include, but are not limited to, loss of principal, low or no returns, long time horizons, the inability to take back your principal, the lack of a liquid market for your investment, regulatory and legal risks, market risks, and general suitability issues relating to the viability of a particular issuer. In addition to these general risks, an investment in the cannabis industry also has industry-specific risks that you need to be aware of before you invest. Among others, such risks include: