Med-X: On marijuana-focused initiatives and crowdfunding
It would have been odd to hear if it happened several years back. But now that marijuana is legal in over 20 states in the country; to see a company gathering funds online to step up their research on marijuana and its market potential is like witnessing a launch of a new trend.
Med-X is the first cannabis firm in the US to brave the crowdsourcing platform. It’s a bit strange for the company since they’re not selling an innovative gadget as most startup firms do. Rather, the company, as said in its press release, aims “to cultivate and support the fast paced emerging cannabis industry through such activities as compound identification and extraction of the identified cannabidiol (CBD) compounds for the present medical industry demand.”
Indeed, it’s more than just tapping a newly erected market’s unutilized potential. In an article published in Leafly.com, what Matthew Mills and Dr. David Toomey, its founders, wanted was to create more jobs and make their products the safest on the market—in short, revolutionize a future industry. It happened in late 2000s when the fight for cannabis legalization was still on its embryonic stage.
“Given the medical background of Dr. Toomey and others on the team, the company took a natural ‘first, do no harm’ stance on medical cannabis, espousing principles of health and education and positing that the products used to grow and cure medical cannabis should be strictly regulated,” the article said.
Fast-forward to 2016, the company, with an outstanding cannabis product under its belt, Nature-Cide All-Purpose insecticide, is now looking for bigger challenges. It now wants to expand through crowdsourcing. But Mills and Toomey have a different idea in mind. They both want people—the future funders—to be part of the company, simply because they believe that they should be partners with “donors” who have faith in what they do, its products, and its potential contribution to the inchoate weed market in the United States.
“Think of people who invest in companies to say they were a part of it even without getting equity—what will it be like when they get equity? People want to be a part of this kind of thing,” said Mills.
Thanks to Regulation A+ of Title III of the Jumpstart Our Business Startups (JOBS) Act of 2012, or simply ACT IV, as its enactment into law last June of 2015 has allowed even normal investors without accreditation to directly invest in private companies. It has become a perfect tool for companies that plan to expand and offer fair opportunity to regular people who want to be part of their growth.
Med-X’s equity fundsourcing campaign on StartEngine, said Toomey, will be a key factor in augmenting the company’s goal of educating the public on the benefits of marijuana. Long before this crowdfunding initiative, the company has been doing its best to change the American nation’s negative notion of the weed through The Marijuana Times, its publication arm.
Just recently, a Colorado State University researcher has jumped to crowdsourcing to gather funds for his research on marijuana’s possible long-term effects on multiple sclerosis patients. According to Thorsten Rudroff, director of CSU’s Integrative Neurophysiology Lab, the project will focus solely on its medical advantage and never on promoting its use.
“Marijuana use may have additional benefits, such as improving motor function, but this is all based on anecdotal evidence. We don’t have scientific evidence that this is working, so we think this research could provide valuable information,” Rudroff told The Denver Post, adding that Colorado is an ideal place for the research as “it can’t be done in many other states that don’t have the same marijuana laws.”
Crowdsourcing has become appealing to startups for many reasons. The most obvious of which is that startup companies are typically owned by young innovators, usually millennials, and they know that people from their generation will most likely be the first ones to support their enterprise, especially if it has a “social” overtone to it.
A CNBC report revealed that approximately 77 percent of crowdsourcing site Fundly’s users were age 44 and below and 58 percent were 34 years-old or younger. Crowdsourcing has also become a palatable donation system to “socially conscious” millennials, since, compared with older people, they have vaster knowledge of technology, as well as comfortability towards online payment system.
“It’s a foreign concept for them to pull out a checkbook, find an envelope. They don’t even trust the U.S. mail,” said Foundly CEO David Boyce. “They’d much rather do it [donate] online.”
Ruby Au of Empowered.org said in an editorial post on Crowdsourcing.com that millennials are the ideal target market for this kind of system. Going against the traditional donation method, she suggested, could be a form of their harmless rebellion.
“Having grown up with technology, millennials have been bombarded with branded advertisements of every form since an early age. During that process, they have become quite jaded with the commercialization process, easily writing off cliché large scale marketing as insincere corporate strategies and artificial business schemes. That’s where the attraction of crowdfunding kicks in,” Au says.
Juxtaposing all this to marijuana legalization, activist Betty Aldworth’s famous “Millennials will make cannabis industry great,” adage will explain it all. Marijuana companies know that expanding their brand reach, even advocacies, could be translated to reality faster by tapping a system that is wholeheartedly embraced by the younger generation, its largest audience.
How about its efficacy? If it worked in other markets, then there’s a high chance it would work for cannabis as well. Of course, selling an idea that resonates with the target audience remains key. As it works seamlessly in Canada, the first nation to legalize medical marijuana and perhaps, soon, even for recreational use, then there’s the possibility that it will be successful in the United States.