Today’s cannabis market is smoking hot. Startup launches abound. Consumer interest is robust. Regulatory guidance is rapidly evolving.

These trends show no sign of abating. Marijuana is fully legal in 11 U.S. states and the District of Columbia. It is medically legal and/or decriminalized in 24 others.

According to Grand View Research the global legal marijuana market is projected to reach USD 146.4 billion by the end of 2025. This has spawned a flurry of new startups worldwide.

According to Fit Small Business, the cost to launch a regulated cannabis dispensary is approximately $775,000. Annual operating costs for a regulated dispensary average are around $1.92 million annually.

As is the case with any developing industry, the cannabis space is ripe with ambitious entrepreneurs who are often still new to the business world. At the same time, there are experienced business leaders who can set the pace for the others.

With the continued evolution of the industry, heavy regulation is beginning to take hold. With oversight and conformance with state laws and regulations vital for success, startups need a single source of truth where organizational decisions and actions can be effectively facilitated through document creation, management, and cap table management tools.

An Evolving Landscape

The cannabis industry is facing a corporate governance problem. And it’s one that startups can ill afford to turn a blind eye to, given the frequently changing regulatory landscape.

Today’s cannabis businesses must maintain strict compliance with state regulations along with federal law. Often shareholder registries are managed through the use of rogue spreadsheets. Because of the human element, they are often susceptible to errors.

The issuance of new shares or options prompt updates to these registries. Many early-stage companies use convertible notes which transfer into equity based on targeted milestones. The problem with this is that these transactions don’t always occur correctly. So anytime there are discrepancies in these records, they can be very time consuming and costly to reconcile.

Given the importance of these authentic record of ownership, these errors can be problematic. If the information is incorrect or out of date, contacting shareholders to vote on major acquisitions or a sale can prove difficult.

This is where the promise of a new normal comes into the picture.

In short, Equa endeavors to allow companies to focus on their core business while taking care of the nitty-gritty backroom stuff that they cannot achieve in terms of bandwidth, knowledge, and experience.

There are a number of ways that Equa hopes to become a differentiator for cannabis companies:

Compliance: Because Equa is an all-in-one documents platform it can help address regulatory concerns, It can also serve as a valuable tool for KYC (Know-Your-Customer) procedures.

Information Transparency: The blockchain allows for the storage of relevant corporate information (i.e., shareholder name, address, shares, etc.) all on a digital, immutable ledger. This will provide an easy way for shareholders of cannabis enterprises to register their holdings directly with the company, rather than through a broker. Moreover, a distributed ledger approach can offer greater public access to share ownership percentages, boosting the likelihood of more informed investment decisions.

Voting Transparency and Shareholder Engagement: Equa can provide a mechanism that allows shareholders easier access to their voting rights, proxy transfers (if required), and more accurate vote tallying.

Organization and Efficiency: Equa can mitigate the need for paper share certificates while providing an accurate documentation record of shares issuance and ownership. It can help streamline organizational processes as well as reducing asset transfer settlement times. And in some cases, counter-parties could potentially be eliminated altogether.

Conversions: Through the use of smart contracts, preferred shares could automatically be converted to common shares with each financing round. Each transaction will be recorded in the digital ledger, eliminating the need for human updates or multiple copies of shared registries.

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

The year was 1993. I registered my first corporate entity, an S corporation for a new Chicago-based business I’d decided to launch.

Several months later I sat in stunned amazement after receiving a voluminous three-ring binder with all of my documents.

“Yipes”, I thought. “What have I gotten myself into?”

Keep in mind that these were the pre-Internet days. There was no web, no cloud service to house the documents on, no email, nada. Yet somehow, I had to figure out how to keep all of these documents straight.

My solution? Tuck the binder away for safekeeping and never look at it again.

Sound familiar?

A Flurry of New Documents

I’ve now established corporate entities in states like Indiana, Nevada, California, New Mexico, and Colorado over the years. And thankfully, with the growing adoption of the Internet, the process of setting up a business has become exponentially easier.

Take a look online and you’ll find an ocean of corporate entity services for setting up LLCs and the like. They’ll file the appropriate Secretary of State documents, set up a tax ID number, and secure a resident agent for you if you reside out-of-state.

The good news is that many of these companies are now able to send you an electronic version of your documents. Unfortunately, if you’re anything like me, these documents are rarely given any attention. In fact, often they end up getting parked in an e-repository gathering cosmic dust, vulnerable to security hacks.

The filed formation documents, however, hold great importance in terms of equity holder rights as well as the management and operation of your entity. For corporations, this is embodied in what is known as the “articles of incorporation” and the “bylaws.” Limited liability companies (LLCs) on the other hand utilize certificates of formation and operating agreements.

Limited Liability Companies, in particular, have grown in popularity over the years in part due to less onerous document requirements. On the other hand, if you form S Corporations, C Corporations, and certainly Limited Liability Partnerships, you’ll likely find your paperwork to be much more voluminous.

In the end, every business needs a written agreement outlining the operational roadmap, protocol, and rules. These operational documents are your company’s governance model, akin to a written constitution or charter.

But wait, you’re not done.

Once your business is operational, you will find that it will spawn all sorts of other documents that can be challenging to keep organized. By way of example, Nevada and Wyoming corporations offer major benefits in terms of asset protection. So, documents tied to brokerage accounts, gold certificates, cars, homes, and other tangible assets placed under say an LLC must be properly accounted for and stored in a secure and safe environment.

The Blockchain of Business

Equa is a promising new company positioned to deliver a compelling solution to the morass of documents that business owners are required to manage. It combines the ability to easily and seamlessly form a new business entity with the ongoing support needed to ensure that documents are up-to-date, organized and easily accessible.

Equa's key value proposition is the ability to foster the living core documents that are the brain of your business. Equaeffectively facilitates the constellation of start-up documents and business agreement by employing the emerging technology known as Blockchain.

In his book, The Blockchain and the New Architecture of Trust, Kevin Werbach, Professor of Legal Studies at the Wharton School of Business defines blockchain as “a data storage system using linked sequential chunks of information. It is literally a chain of blocks designed to create an immutable ledger of transactions.”

In other words, blockchain as a digital ledger is exquisitely efficient in organizing records of business agreements and transactions. It offers privacy protocols that regulate how information can be accessed as well as a digital trail identifying who and when the information was accessed.

An additional element in the blockchain constellation, known as smart contracts, mitigates the need for intermediaries, boosts consistency and creates accountability in the workflow process. This helps boost the efficiency and effectiveness of a business.

New Frontiers of Business Asset Management

Back when I formed my business in 1993, the three-ring binder full of documents I received included stock certificates to issue shares to investors. Moreover, any assets held by my company were to be recorded on a paper document and filed away appropriately.

Today with blockchain’s emergence, tokenization is the next evolution for the future of business. Literally, anything of value can be tokenized by recording it on a blockchain with the digital tokens signifying value and ownership. Investor shares can be easily purchased and sold from your business via tokens, all easily transferable via the blockchain network.

All of this reflects the next wave of proprietary rights tied to the tokenization of assets whether they be commercial real estate, cars, even gold. Equa can offer direction on how to build a digital token framework for managing these assets in a secure and efficacious way.

Now with a living version of your organizational documents and tokenized assets, you’ll no longer be working with a static document that is sitting on a hard drive on some computer. That’s what sparked my interest in Equa and I hope you’ll invest the time to learn more about this exciting startup as well.

Michael Scott is a Las Vegas Blockchain Journalist and blogger for Equa

To learn more about Equa and sign up for a free trial, please visit us at www.equa.global

Whenever a new business is launched, it’s long-term survival is a key aim.This is symbolized by a “Built to Last” mentality, a theme popularized by management guru Jim Collins, co-author of a popular business book by the same name.

The evolution of a business can be very ephemeral and uncertain. Moreover, poorly designed systems, mismanagement, and neglect can quickly sink a company. This symbolizes a terribly weak, fragile infrastructure. For often it’s not outside influence that destroys a company but rather inside neglect.

In his bestselling book Antifragile, author and prominent thought-leader Nassim Taleb explores a concept known as fragility through the lens of the following metaphor:

At some point, you’ve likely received a package in the mail at some point in your life marked:

FRAGILE: PLEASE HANDLE WITH CARE

But have you ever received a box that says

PLEASE MISHANDLE THIS BOX AND DROP IT?

Most likely you haven’t

In Taleb’s taxonomy, fragility reflects the inclination to ignore risks. Or to be overwhelmed in monitoring the risks in an attempt to survive and prevent disaster.

That’s the state of many companies and their document systems — they’re massively unprepared for unforeseen risks, what Taleb affectionately refers to as “Black Swan events.” An example of this would be a major compliance audit, where a company discovers major deficiencies in their document systems.

So what is the antithesis of fragile? Given that we don’t really even have a word define it, Taleb took it upon himself to invent it.

And he calls it:

ANTIFRAGILE

To approach this from an antifragile point of view means to do so with strength, wisdom, systems, and resources. This allows a company to not only survive, but prosper amidst the uncertainty, and turbulence of these events.

In explaining his own personal proclivities in terms of antifragility, Taleb is fond of saying:

“I want to live happily in a world I don’t understand.”

Skin In The Game

“Skin in the game” according to Taleb is the foundation of risk management. As he says, “The symmetry of skin in the game is a simple rule that’s necessary for fairness and justice and the ultimate BS-buster. Furthermore, he says: “Never trust anyone who doesn’t have skin in the game. Without it, fools and crooks will benefit, and their mistakes will never come back to haunt them.”

Chuck Williams, Lead Developer for Equa and huge fan of Taleb “antifragility” model argues that business owners, investors, entrepreneurs, change-makers, innovators, creators, and builders all inherently recognize that an important attribute that should never get lost in the shuffle irrespective of how much money a company makes is the reward of a personal achievement that aligns with one’s identity. In fact, it is for this very reason, he believes, that our identity is often wrapped up in the work and projects to which we are most dedicated.

Says Williams:

“Equa enables participants to manage their portions of “skin” (identity), in the form of legally recognized equity (backed BOTH by reviewed legal documentation, and blockchain-enabled asset issuance of stock & equity agreements) and allocate these across and among multiple organizations within their networks and communities.”

According to Williams, we call this “ownership.” Being an owner of an organization, project, or even simple task, he believes, measurably improves results for EVERYONE involved.

“As an “Agreements Service Management Platform” the #1 goal of Equa is to structure, maintain, protect, solidify, communicate, and amend AGREEMENTS. In business, ALL failures and ruin can be easily traced back to failures in an agreement due to the lack of or failure to effectively execute these types of agreement activities.”

Williams goes on to note that company agreements that are not structured properly with regulators may lead to the IRS, SEC, or CFTC knocking at your door.

“Failure to maintain these filings can get you slapped with fines, or worse, shut-down by government agencies. Moreover, a lack of due diligence in protecting the authenticity of your agreements can leave you with a worthless bill of goods.”

Concludes Williams:

“Communications, finalizations, and amendment of agreements manifest as Operating Agreements, Board Meetings, and Voting activities. All of these activities are centered on keeping organization agreements alive, functional, relevant, pragmatic, and true. This greatly reduces the risk of ruin for any organization.”