Governments worldwide have made some adjustments in regulations of their local cannabis industries toward supporting a more welcoming business environment for these players. Cannabis firms have cheered over this news, but these advancements only mean one thing: a greater requirement for transparency.
Legalization in some states is accompanied with a very high tax imposition. In the case of California, excise taxes on recreational and medical cannabis stand at 15 percent, according to Forbes. This is on top of other local fees and taxes.
Surely, states will strive to get their fair share by ensuring that companies accurately report their financial performance.
But not only will transparency be mandatory. Companies should realize the significance of adopting this principle in the long run if there is an intention to keep their businesses growing.
Full and honest disclosure of the step-by-step value chain of their products will position their brands as reliable in the midst of a myriad of fraudulent companies.
A detailed profile of a cannabis firm will also boost its visibility among investors and customers.
In Alaska, for instance, cannabis licensee applicants indicate their business addresses, email addresses, and phone numbers, whereas those scouring applicants in Oregon will only find the business name, license type, and the company’s headquarter-country in the records.
But the question is: is the multi-billion dollar industry, what used to be an underground economy, prepared to open its books? For a relatively young industry that, for the longest time, has been conducting transactions in the shadows, achieving transparency will not be easy.
However, even without full-blown legislations, some cannabis firms are already coming up with ways to comply with transparency through reporting to the Securities and Exchange Commission (SEC) and utilizing the blockchain system.
One firm that voluntarily adopted both practices is PotNetwork Holdings, Inc. (OTCMKTS:POTN). The company is known for manufacturing the highest quality cannabidiol (CBD) products in the market. CBD is one of the several compounds in the cannabis plant to which therapeutic applications are attributed.
Mid-June, the company said it is preparing to file with the SEC the Form 10, which will make the Florida-based firm a fully reporting SEC firm.
“This action is fundamental to the Company’s efforts to demonstrate heightened transparency to its investors, and bring the Company greater visibility and credibility before a substantially larger group of qualified investors,” the firm said in a statement.
POTN’s action comes after its recently released report of its audited consolidated financial statements for 2017. Revenues during the year were pegged at $14.49 million, while gross profits reached $5.180 million.
“We believe that we have developed a company with a business model and market traction deserving of a stronger presence in the financial markets. With revenue continuing to demonstrate strong gains year-over-year and an ever expanding distribution footprint, this Board of Directors’ decision was inevitable,” POTN CEO Richard Goulding was quoted in the statement.
With this new unit, POTN can ensure efficiently handling future transactions of its proprietary alternative coin.
With several states up to legalize cannabis, companies cannot veer away from the direction toward a more transparent market. POTN’s efforts to lead that initiative makes it poised to enjoy the benefits of being a beloved firm among investors.