Equity vs Shares
When you think about ownership of a company, first think about a big bag of weed.
You weigh it, and its a pound. That’s the whole bag, 100%. At this point you can break it up into as many pieces as you want. If you sell it by the ounce, that’s 16 pieces. If you sell it by the eighth, that’s 8 pieces from every ounce or 128 pieces.
With a company you break it up into “Shares.” When you start the company, you decide how many pieces you are going to break it up into. If there is only going to be three or four owners, you break it up into a small amount – like a thousand shares. But if you think that someday you might have a lot of owners, then you break it up into a big amount – millions of shares.
In our case, we want to someday have a lot of owners, so let’s say we agree to break it up into 10 million shares. Why would we want to have a lot of owners, you say? Hold that thought, I’ll get back to it at the end.
If we start with ten million shares, that’s all there is going to be. That’s 100%. Five million, one hundred thousand shares is 51% equity. That’s what the community is going to own in our company. For now, we can pass that around, in whatever size pieces we want, to 30-35 people. 1% equity gives you 10,000 shares, 2% gives you 20,000 shares, and so on.
That’s how ownership and equity works. How many pieces from the whole 100% do you own? Those are the shares. What percentage of the whole company do you own? That’s equity.
As the company gets bigger, it’s more important to focus on shares than to worry about how much equity you own. Shares are where the value is.
In business, it’s not so much about how much money is coming in the front door, its more about how much money you keep, right? Right? Well, yes and no. Yes, because keeping money is what we are all trying to do, all day every day.
No, because there is also another way to make money off a business. The way those Wall Street mother fuckers make money. LeBron and Jordan make big time bank, right? But they’re employees. Big time employees yeah, but they still get paid by the boss. How much more does the Buss Family make? That’s what I’m talking about.
After we get the permit, and we get the store all setup, we are going to be running a lot of people through those doors, right? If that goes the way we all think, we will be racking. Well we gotta let the world know about it through the media, every step of the way.
People are going to see us and read about us, and other people in the cannabis world are gonna start thinking, I wonder if I could buy that company for myself? I wonder how much they’d sell it for?
Now the city of LA has said they think these dispensaries will be “$5 million businesses.” I say “How the fuck would they know what it’s worth?” They don’t.
What it’s worth is what someone is willing to pay for it. Go on the Internet and see what dispensaries sell for. It’s a wide range – $4 million to $15 million are the pieces I’ve seen.
So at those prices, our company, with 10 million shares equaling 100%, would be worth – $0.40 to $1.50 per share. So if you owned 1%, 10,000 shares, your shares would be worth between $4,000 and $15,000. 5% would be worth between $20,000 and $75,000, and so on.
That’s how shares and equity work.
Now the next step is to try to figure out how we can make our company be worth that $15 million number, or more, and not less.
There’s a lot of different ways to explain this, but it always comes back to two things – how many people are coming through those doors and how much of their money the company keeps.
We need to make these dispensaries really big. We want lines of people on the weekends, and people coming through to get their weed all day long. We all know how to do that, right??
The next part of that is, we can’t take all the money out of the business. It has to keep money in the bank. The more money it keeps, the healthier it is, the more valuable it is to the outside world.
Right now there are a lot of people and companies that want to buy dispensaries, and they will pay big bucks for them. The healthier and bigger the dispensary, the more money they will pay for them. We just saw one sell for $23 million. That’s $2.30 a share if it were our company.
So let’s say we run this dispensary for a while, and we take $1 million out of each one at the end of the year to split up, and we put $1 million in the bank for each one, that’s $6 million. To be able to keep that much money we would have had to take in about $6 million from each one. $6 million times 6 dispensaries is $36 million total that came in through the front door.
If one dispensary is worth between $4 million and $15 million, $2.40 to $9.00 per share. That’s how much its worth.
People hear this and they be saying “Sell! Sell!” and shit. Right? Well fuck that, we making $1 million a year per shop. Why kill the golden goose?
What we are going to do next, is beyond LeBron and even beyond Buss Family shit. This is Robert Johnson of BET shit. American’s first black billionaire Robert Johnson.
We take the company public. We put it on the stock exchange. We create new shares and we sell them to the stock market. That way we keep what we own already, make money off of the stock we sell and keep making our money from the company every year. We make more shares and we sell them off, that makes us own less equity but we still own our shares. See? Like I said before that’s where the value is.
If someone wants to sell their shares, they can. But you don’t have to. If everything goes right, the longer you keep them, the more they are worth. Generational wealth, like Robert Johnson.
How do we do this? It takes at least three years of working and building up the company. Shit has to be run tight. CPA’s and lawyers and all that shit has to be done perfect. I mean PERFECT. I don’t know how to do this shit, but I gotta white boy that works for me who does. That’s all he’s ever done, and he can do it for us when the time is right.
And here’s the most important thing about putting shares on the stock exchange. Instead of a few motherfuckers reading about us in the media and wondering if we would sell and for how much, there could be millions of people all around the world reading about us and wanting to own some of us.
What happens then? The price goes up. That’s how Robert Johnson became a billionaire.
He built up a successful company, put its shares on the stock exchange, didn’t get greedy, took his time, didn’t take too much money out. Everyone started to hear about his company, everyone wanted to buy some shares of it. The price kept going up. He took it to the highest price he could get it and then SOLD the whole thing to Viacom. Boom, billionaire!
I’m not saying we gonna be billionaires. What I am saying is we play the game the way those mother fuckers do, running shit really really tight, not being greedy, not being in a hurry… and we can change the future of the community and our families forever.
George Boyadjian, CEO and founder
The Fresno Original