Andrés Israel singled out Luxembourg in numerous Bloomberg articles last year. At the end of July, the Uruguayan CEO of Global Cannabis Holding (GCH) opened a branch of the company in Luxembourg, in order to launch the world’s first tokenisation operation related to investments in cannabis.
For this purpose, GC Capital divided its shares into two categories, one of which is tokenised by the Luxembourg fintech Stokr with the aim of raising $1.75m from well-informed investors, but not strictly professionals per se. The digital securities priced at $350 are considered securities and fall under MiFiD.
“1.75m dollars is not necessarily spectacular,” admitted David Luftglass, one of the four co-founders and managing partners of GCH, in a recent interview with Arnab Naskar, one of the co-founders of Stokr. “But it’s important to understand our business model. It all started very early for us, in 2013 in Uruguay, one of the countries very far ahead on the subject. We were lawyers and we helped a number of players to bring their companies into line with the law. Sometimes we weren’t paid in cash, but in equity. That’s something we continue to do. But this fundraising will enable us to invest in 10 to 20 new companies over the course of the year.”
Once the world realises that there is this new possibility of finding finance, in a way that is robust, secure and compliant with European legislation, GCH would like nothing better than to continue its development, having already raised $1.2m to date. Documents filed with Stokr say it is targeting 105 companies in its portfolio by 2026. The offer closes in mid-September.
Distribution in Europe begins to interest GHC
GCH’s other stance is not to focus on one part of this very fragmented ecosystem, but to add complementary pieces in an attempt to ultimately have an ecosystem that makes sense. “We want each new company we invest in to bring value to the portfolio. Our first step is to verify the financial stability of the company, conduct a standard due diligence, and ensure that the team includes experienced leaders who align with our way of seeing things,” adds the representative of the Canadian holding company, who says they are closely interested in distribution in Portugal, Germany and Australia.
Since Israel gave an outline of his project, his team has had to put nearly 200 cannabis-related companies through the mill of legal and financial rigour, to retain just 38, most of them American. “If the Europeans have projects to submit to us, don’t hesitate,” he says, gamely.
“For us, Luxembourg is a unique place! Trustworthy and stable. It understands business. It’s a bit slow when it comes to complying with KYC etc., but then everything speeds up!” says Luftglass, who adds: “What do you know about Uruguay? It’s the most stable country in the region, and also the most educated since the government decided in 2007 to offer computers and internet connections to all children. This has created an incredible sense of entrepreneurship and an above-average number of engineers. Not to mention the fact that it is one of the most advanced countries in terms of renewable energy!”
After ETFs and the shares of certain companies, tokenisation comes as a new method of financing a fast-growing business, which had reached $25bn by 2021 and should reach up to $70bn by 2028. While Canada was a forerunner in this field, the reluctance of Canadian banks to lend money to invest in foreign companies has forced various players to look for other solutions.
This article was first published in French on Paperjam. It has been translated and edited for Delano.