Encinitas-based cannabis platform BudTrader launches stock offering

Marijuana networking site using online crowdfunding


BudTrader.com CEO Brad McLaughlin explains the site’s goals and services in a promotional video announcing the company’s stock offering. (BudTrader video capture)

North Coast Current

An Encinitas-based cannabis advertising and networking platform recently gave the green light for its call seeking new investors.

BudTrader.com, founded in 2016, launched a Regulation Crowdfunding effort through Equifund CFP, it was announced May 23.

The company’s more than 2 million registered users network and create ads for legal marijuana products, services, events and job opportunities on its platform, BudTrader.com described in a news release.

“As an online platform, it connects the entire industry from grower to consumer and across state boundaries,” Equifund CFP explained in a separate announcement.

Regulation Crowdfunding allows eligible companies to offer and sell securities through crowdfunding efforts, according to the federal Securities and Exchange Commission. The transactions occur online through an SEC-registered service such as a funding portal or broker-dealer.

BudTrader has been successful because everything we do is different and disruptive.

— Brad McLaughlin, BudTrader CEO

“BudTrader has been successful because everything we do is different and disruptive,” BudTrader founder and CEO Brad McLaughlin said in the company’s news release. “Because of the incredible growth that BudTrader is experiencing, we knew we were going to need to raise money to invest in infrastructure and technology in order to continue to grow to over 5,000,000 users.”

The common stock offering is $1.25 per share with a $420 minimum, according to Equifund CFP’s page for BudTrader. Although the term “420” is common in cannabis culture, its origins are debated, Investor Palace noted in an April 16 story about the annual unofficial marijuana-smoking holiday of April 20.

Although the announcements did not specify any exchange where BudTrader would be listed, it’s been common for marijuana-related startups to launch their public offerings on securities exchanges in Canada and elsewhere internationally because of federal regulatory and legal hurdles in the U.S.

BudTrader.com sought Ottowa-based Equifund CFP for its public offering because it was in keeping with BudTrader’s philosophy, McLaughlin explained.

“We could have easily taken money from venture capitalists or hedge funds,” McLaughlin said in BudTrader’s news release, “but we decided that we’d prefer to give the general public, the cannabis community and our 2 million registered users the chance to invest in BudTrader through the Equifund platform.”

“We are proud of BudTrader who opted to raise capital from the crowd through the Equifund platform, instead of utilizing traditional financing avenues, so that everyone will have the chance to invest,” Jordan Gillissie, Equifund CFP founder and CEO, said in Equifund’s announcement. “In the past, these opportunities were only available to the well-connected or the ‘qualified investor.’ Equifund not only opens these previously unavailable opportunities to everyone, it does so with modest entry-level commitments.”

In a Risks & Disclosures statement on its Equifund site, BudTrader acknowledged it has challenges ahead, from profitability to industry competition.

“We have incurred operating losses in every quarter since we launched our business and may continue to incur quarterly operating losses, which could negatively affect the value of our company,” BudTrader stated. “We face significant competition for our Internet-based Cannabis Social Media Marketplace, a BudTrader Delivery App, our cannabis delivery app, and BudTrader TV.”

Such competitors include Leafly, MassRoots and Weedmaps.

The proliferation of such networks is indicative of a demand that startups seek to fill in a climate of challenging regulatory and legal pitfalls.

“In the age of the social network, the cannabis industry is in a unique predicament,” Laura Kuhl wrote in a 2018 article published on PotNetwork.com. “Advertising, marketing, and — most importantly —networking cannot be done across the usual channels. Cannabis businesses cannot easily advertise products or even co-mingle with one another when many of their operations are still considered illegal in over twenty states.”

Medical marijuana has been legal in California since 1996 and is one of several states to expand legalized recreational marijuana in the past several years.

BudTrader lists its business office in Encinitas.

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