EXCLUSIVE: Funding Alternatives For Cannabis Companies Present Unique Opportunities For Investors

The cannabis industry has been affected by disruptions in the banking industry and changes in funding sources.

Valley National's recent $72 million loan to Truly “is of particular interest, as it represents a significant move out of the shadows for banks in the cannabis industry," Brennan Manna Diamond managing partner Stephen Lenn said at the recent Benzinga Cannabis Capital Conference.

On his part, Tyler Beuerlein, Chief Strategic Business Development Officer at Safe Harbor Financial SHFS, noted that “larger financial institutions are entering the cannabis industry and this is a positive development." Traditional banking products as crucial for the industry's success, he says.

280E Tax Reform Is Also Essential

Travis Goad, the Managing Partner at Pelorus Equity Group, stated: “The last 12 months have been difficult, and some companies have been quick to adapt to the challenging market environment, while others have faced challenges due to their development and growth cycle."

Additionally, Goad believes that 280e tax reform is necessary and is one of the biggest issues facing the cannabis industry. “The industry is still maturing, and as more supply comes on, the market becomes more competitive, and companies need to focus on becoming more efficient in order to turn a profit,” he said.

However, companies that outperform are those that focus on their expense lines and become efficient faster than others. Goad sees this as the next stage for the industry in order to achieve healthy cash flows.

Furthermore, Jack Mascone, Head of Debt Capital Markets at Seaport Global Securities LLC, noted that some borrowers may have difficulty navigating the legal and regulatory landscape, which could make it hard for them to overcome their financial difficulties. However, "there is a willingness among syndicated groups (groups of investors who pool their resources to invest in a single project or venture) to work with these borrowers," he said.

Greenthumb Industries Inc GTBIF board member Wendy Berger discussed failures and business validations as opportunities for acquisition.

Although she noted that the acquisition's decision should be based on careful consideration and due diligence, "this is a really good time to to be an investor in this industry."

Berger also emphasized the importance of making traditional sources of capital available to small businesses, women, and minorities in the country, believing that the focus should be on entrepreneurship and small businesses.

Moreover, the panel focused on considering community banks for lending opportunities for small businesses, citing the case of New York's recreational market.

Despite the difficulties, they showed optimism about the industry's future and predict continued growth "as more states come online."

Image By Benzinga