How To Invest in Jay-Z’s Cannabis Venture
The democratization of financial markets over the past couple of decades has drawn people from all classes, statuses and trades into the robust world of investing. Fifteen years ago, it might have been hard to imagine being able to drop a few bucks on fractional or whole shares of a company with the tap of a thumb and a smartphone. Yet here we are, with a wealth of information and plenty of retail investing apps at fingertip-availability for anyone to build a formidable and fruitful investment portfolio.
But for beginning investors wading the waters of over 2,800 companies listed on NYSE, overchoice can be overwhelming. Many choose a tandem approach to the market: diving into the “blue chip” stocks of industry-leading companies that are less vulnerable to market volatility and following the money moves of high-profile public figures and investment professionals. Retail investing apps like Stash offer such opportunities, like the exchange-traded fund (ETF) Global X Guru Index Fund that they nicknamed “Copy the Leaders.” In this basket of stocks, investors can invest in “the holdings of some of the top hedge funds.”
Tracking big companies and big names is indeed a practical investment strategy for conservative holders looking to establish long-term portfolio stability. But a growing number of investors — especially those with disposable income — are seeking riskier investments in search of front-seat growth opportunities in promising startups and growth stocks.
The JOBS Act, signed into law by Barack Obama in 2012, eased “regulatory requirements for smaller companies going public” and opened the door for non-accredited investors (those making less than $200,000 annually) to further diversify their portfolios by funding vetted startups via platforms like Republic, StartEngine, MicroVentures and many others. Still, a majority of the surer pre-IPO venture gambles are hidden behind venture-capital firm walls — accessible mostly to professionals, insiders and individuals with sufficient capital to consult and invest alongside the former groups.
For the non-accredited investor seeking attractive ground-floor investments, research is paramount while considering factors like a company’s scalability, market validity, and the personnel backing the particular venture.
And for a company with billionaire mogul Jay-Z (who recently sold a 50% stake in his champagne brand Ace of Spades to luxury-brand conglomerate LVMH) at the helm and already trading publicly, the California cannabis imprint Monogram is an interesting foray to follow as far as budding (and bud) companies go.
What is Monogram?
Monogram is a high-end marijuana brand by Jay-Z and San Jose cannabis startup Caliva.
After joining Caliva as it’s chief brand strategist in 2019, Jay-Z launched Monogram in conjunction with Caliva and Left Coast Ventures just a year later (in December 2020).
When looking at Monogram’s official site, the brand’s ongoing focus on the culture, craftsmanship, and palatable experience of recreational marijuana is apparent. It’s flagship product is a 1.5-gram joint that stakes claim to an artisanal-rolling technique that took a year to develop. Monogram’s varying aromatic and piquant strains, namely, №1, №3, №88, and №70, have been cultivated by veteran grower Deandre “De” Watson.
Time will tell if consumers buy into Monogram’s sophisticated product formation, presentation, and potential. But it seems Jay-Z and entrepreneur Michael Auerbach sure have.
A month before Monogram’s launch, Auerbach, as the chairman and founder of the special acquisition company (SPAC) Subversive Capital, announced plans to acquire Caliva and Left Coast Ventures. As part of the deal’s finalization, Subversive Capital scooped a formidable portfolio of musician cannabis brands, including Marley Natural, Carlos Santana’s brand Mirayo, and Jay-Z’s 50% stake in Monogram.
And with its newly acquired basket of weed brands, Subversive Capital was renamed The Parent Company (TPCO Holding Corp.) by Jay-Z and recruited him to be its Chief Visionary Officer.
As part of the overall deal, TPCO Holding Corp. paid an initial $25 million in stock to Jay-Z’s Roc Nation (and $7 million each year) in exchange for rights and access to the company’s roster of athletes and artists. Jay-Z also received 5 million shares of TPCO Holding Corp. with rights to a million more shares. In the name of social justice, TPCO Holding Corp. vows to donate 2% of its net income to minority-owned cannabis companies.
The company is currently considered the most well-capitalized cannabis company in the U.S.
How to invest in The Parent Company (TPCO Holding Corp.)
Recreational marijuana is legal in Canada but federally prohibited in the United States. With that fact, the U.S. federal restriction presents a certain barrier for American investors wanting to invest in recreational-marijuana companies, as the stocks of these companies are disallowed from trading on U.S. stock exchanges. Accordingly, TPCO Holding Corp. is currently traded on Canada’s NEO Exchange and OTCQX (as an over-the-counter stock).
For those looking to invest in TPCO Holding Corp., an analyzation of both marketplaces is ideal for choosing an investment route.
OTCQX
TPCO Holding Corp. stock can be purchased under the ticker GRAMF as part of OTC Market Group’s top-tier OTCQX marketplace. For some context, the OTC market trades directly through a network of dealers as opposed to being listed on major exchanges.
(If you’re familiar with the term “penny stocks,” these speculative stocks are also traded via OTC on the lowest tier, known as OTC Pink or “pink sheets.” But the highest OTC market tier is OTCQX, and the companies trading at this tier are subject to SEC regulations and must meet certain criteria, such as governance transparency and the stock must not be a penny stock. Blue-chip companies from countries like Europe, Canada, and Russia are listed on OTCQX.)
But some U.S. and international discount brokerage firms may charge for handling such OTC transactions. If you want to buy GRAMF via OTCQX through E-Trade, for example, you’ll be charged a $6.95 commission fee (as of this writing).
Neo Exchange
NEO Exchange is a Toronto-based stock exchange that — among other goals — claims to “eliminate predatory market behaviors such as high-frequency trading while ensuring liquidity” through its “unique market-making program.” Founded in 2015, the exchange is owned by Aequitas and lists over 120 securities, including a number of BlackRock iShares ETFs.
As mentioned earlier, TPCO Holding Corp’s current vertical is recreational marijuana use, which is federally prohibited in the United States.
But since Canada’s Cannabis Act in 2018 legalized all facets of weed consumption and acquisition, non-medicinal marijuana companies that meet specified requirements can trade on the country’s exchanges. TPCO Holding Corp. currently trades under the ticker GRAM.U on NEO Exchange.
The easiest route to TPCO Holding Corp. (and other international stocks)
Technically, TPCO Holding Corp’s stock is considered an international stock for U.S. investors. While stateside investors wait for the bow of federal red tape to unravel around the regulatory issue of recreational weed use, those looking to indulge in recreational weed stocks may be better serviced by a multinational broker that offers wider access to global-market assets. Interactive Brokers (IBKR) proves to be one of the easiest and most cost-efficient options for U.S. investors as noted by Investopedia and NerdWallet.
IBKR provides direct access to over 130 exchanges (including NEO Exchange) in 31 countries. And the platform’s fee-schedule for investors is comparable to U.S. brokers like E-Trade, TD Ameritrade and the like in terms of commonly traded securities. The wide array of markets and securities gives it a competitive edge for U.S. investors interested in trading international securities
The IBKR account-opening process is as straightforward as any other stateside household-name broker. After creating an account, users can search for tickers like TPCO Holding Corp’s GRAM.U (as well as any other security offered across various international exchanges) and purchase shares with a few taps.
Disclaimer: I am not a registered investment, legal, or tax advisor nor broker-dealer, and this is not investment advice. All investment/financial options expressed in this writing (if any) are from personal research and experience. It is very important to conduct your own analysis before making any investment. This content is intended to be used and must be used for informational purposes only. Professional advice should be sought where opinion may be implied or assumed. I am not affiliated with any parties or entities mentioned.
