COLORADO: Promap Corp. is shifting its business model to join the regulated marijuana industry, and the months-old firm, which will soon be called Advanced Cannabis Solutions Inc., has hired Christopher Taylor as its first finance chief.
Colorado Springs, Colo.-based Advanced Cannabis intends to officially change its name next week, and hopes to raise capital in short order, Robert Frichtel, founder and president of the company, told CFO Journal.
Mr. Taylor is no stranger to the pot business. He most recently ran his own accounting firm, which specialized in auditing the books of medical marijuana businesses in Colorado, though he says he isn’t an avid marijuana user himself. He has also worked in the gaming industry for both the Colorado Lottery and Colorado Casino Resorts Inc., according to a news release. These days, he is busy transferring his clients to new accountants so he can focus on Advanced Cannabis.
Mr. Frichtel said the company won’t engage in the production, sale or distribution of marijuana. Instead, it will use hoped-for investment funding to purchase properties where the drug is made or sold, and lease the facilities back to the owners. Mr. Taylor said it is hard for sellers and growers to get lines of credit and loans from banks, who despite legalization in the state worry they will run afoul of drug-money-laundering rules if they even allow marijuana businesses to open a bank account. Through its planned sale-leaseback transactions, the operators can unlock value and operating capital from their businesses, and Advanced Cannabis gets a recurring revenue stream in return, Mr. Frichtel said.
Mr. Frichtel said potential investors have responded positively to the company’s business plan, with one exception. He said one investor recently told him that the company must change its name to remove the link to marijuana, but Mr. Frichtel said he ascribes to the marketing philosophy to “tell people what you do in your name.”
In late August, the Justice Department indicated it won’t prosecute violations of federal marijuana laws in states that have legalized the drug for recreational use. Colorado, which already allows medical marijuana use, will adopt a recreational-use law next year.
Mr. Taylor said he intends for Advanced Cannabis to be a fully reporting company by the time it files its quarterly report for the September period. “I get to design the internal controls,” he said, and added that good disclosure practices can help reduce the stigma of being the product of a reverse merger into a company with very small existing operations selling oil and gas maps to companies in those industries.
Despite having just $2,373 in cash on hand at the end of June and barely $4,000 in sales for the June quarter, the stock soared on news of the reverse merger in mid-August. Its thinly traded stock has more than doubled since the announcement and traded recently at $4.25 apiece, giving the company a market capitalization near $60 million.