Cannabis Co. Glass House Lands $50 Million Loan With Favorable Terms: Why It Matters For The Industry

Glass House Brands Inc. GLASF GHBWF, a leading vertically integrated cannabis company, has secured a $50 million senior secured loan, replacing its existing debt with more favorable terms and extended maturity.

The new credit facility, set to mature on January 31, 2030, replaces the company's previous senior secured loan, originally scheduled to mature in November 2026. The refinancing extends the final balloon payment by three years, providing the company with additional financial flexibility.

Improved Terms, Enhanced Liquidity

Under the new agreement, the interest rate is fixed at 8.58%, significantly lower than the rate paid for the prior loan. The facility also includes an interest-only period for the first two years, preserving $13.1 million in cash flow that would have otherwise been used for principal payments in 2025 and 2026.

Following the repayment of $41 million for the prior loan and associated fees, Glass House expects to receive a net cash inflow of $8.1 million.

Also read: Germany’s Cannabis Imports Increase 4x In 2024 Amid Regulatory Changes: Which Countries Are Top Providers?

"I'm excited to share the great news that Glass House has secured a new senior secured credit facility. Refinancing the credit facility strengthens our balance sheet, significantly improves our cash flow and pushes out the maturity of our senior secured debt into 2030,” said Kyle Kazan, co-founder, chairman and CEO of Glass House.

“By negotiating this facility directly with the lender, Glass House has continued its tradition of cutting costs by arranging our own financing. The lender's approval of the credit facility and the favorable terms of the loan are a testament to the strength of our long-standing relationship with the bank and to our shared vision of enabling this company to continue its rapid growth. I'm particularly excited that our company has finally received debt with a rate and terms which are comparable to non-cannabis businesses," Kazan added.

A Shift In Cannabis Financing

Securing debt with competitive interest rates remains a challenge for cannabis operators, given the industry's regulatory complexities and the reluctance of traditional banks to extend credit. Glass House's ability to negotiate favorable loan terms suggests growing lender confidence in established cannabis businesses with solid financial performance.

Kazan also acknowledged WhiteHawk Capital Partners (WHCP), which previously extended credit to the company: "Additionally, I want to extend a thank you to WhiteHawk Capital Partners (WHCP) whose senior secured loan was refinanced in this transaction. WHCP extended credit to us shortly after we went public and before we planted the first greenhouses at our SoCal Facility. Their confidence in our ability to execute at a critical inflection point cannot be understated."

Loan Structure And Future Implications

The loan is secured by first-priority liens on Glass House's greenhouse farms and facilities in Camarillo, Padaro and Casitas, as well as a first-priority lien on other company assets, excluding additional real estate. Key financial covenants include:

• Maintaining a minimum liquidity of $10 million in an account at the lending institution throughout the term of the loan.
• A Consolidated Fixed-Charge Coverage Ratio (FCCR) of at least 1.25x, tested quarterly on a trailing twelve-month basis, with the first test scheduled for December 31, 2024.

The company plans to use the loan proceeds for working capital and general corporate purposes, further solidifying its financial position as it navigates the evolving cannabis landscape.

Read next: Big Tobacco’s Latest $86.8 Million Cannabis Investment Signals Growing Industry Influence

Lead image via Shutterstock