Three Chicago entrepreneurs announced the creation of the Prairie Wellness Fund, Ltd., a private debt fund that will provide financing and liquidity to applicants for the newly created medical marijuana licenses that were established by Illinois law last year.
The state plans to license 21 cultivation centers and each will have to put up a $2 million surety bond and prove $500,000 in working capital available to start the business. Building a cultivation center to meet the state’s strict security requirements is expected to run as high as $10 million, and even dispensaries will need $1 million to $2 million for inventory.
While others are said to be eyeing the same opportunity, Prairie Wellness Fund “would be the first I’ve heard of a business model based on financing applicants, but I’m not surprised to see it emerge,” said Khurshid Khoja, a principal of Greenbridge Corporate Counsel, a San Francisco law firm that specializes in marijuana business law. He also is on the board of the Illinois Cannabis Industry Association.
The organizers of Prairie Wellness Fund are still gauging demand and aren’t yet soliciting investors until they prepare and issue a private placement memorandum, probably around Sept. 1. They plan to seek investors only from Illinois, primarily wealthy individuals and family-run investment pools.
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