MiCIA Ask The Experts: Seed To Sale Funding

5 Questions with Judy Rinkus

(Founder and principal)

Rinkus, a carrier commercial banking executive, brings more than 30 years of corporate loan placement to the cannabis industry.

  1. What role is seed to sale funding playing in the Michigan cannabis business?

A. Seed to Sale funding is a consulting firm the raises debt capital for all facets of the hemp and cannabis industry, including grow/cultivation, processing, testing, retail and secured transportation. Since bank loans are not readily available for the hemp and cannabis businesses, we primarily work with network of private lenders who understand the unique aspects of this growing industry.

2. What Should New Cannabis Business Know About Funding?

A. A loan of your project will be more cost-effective than equity in the long run, since loans are largely non-dilutive to the equity holders. This means that you do not lose any ownership in your company and, therefore, can keep a large share of the profits within your existing group of investors.

3. How Does Seed TO Sale Funding Aid In Helping TO Secure Financing?

A. We work as your advocate to potential lenders by analyzing and structuring your financing needs to meet the needs of your projects and requirements of our network of investors. Since we have relationships with multiple lenders, we can negotiate with them on your behalf to obtain loan structure available for your projects.

4. What Business Have You Helped Get Up And Running?

A. We’ve assisted provisioning centers, processing facilities and grow facilities of all sizes throughout the state of Michigan and nationally. Our loans range from $500,000 on the small side and can reach $20 million or more. Since we started our firm a year ago, We’ve closed about $22 million in transactions, each with their own fascinating stories, These deals range from a one-location, family-owned provisioning center to a large MSO which invested more than $12 million in a cultivation facility in the mid-Michigan area.

5. What’s The Most Rewarding Aspect of Your Job?

A. The loans i provide are helping to build the Michigan and national economy at large, not just in cannabis. The companies, whose loans i arrange, build buildings, employ people, pay taxes and support their own communities. it’s truly a win-win for everyone.

Michigan v. Illinois

Michigan v. Illinois: In the World of Weed, Who Comes Out on Top?

Michigan and Illinois legalized recreational marijuana within months of each other; Michiganders could start buying marijuana starting December 1, 2019 and Illinois residents on January 1, 2020. A comparison of the two states can be a helpful indicator as to how the cannabis industry is taking shape throughout the rest of the country.

The Numbers

Recreational marijuana sales in Michigan approached nearly $6.5 million during the first month and are expected to grow substantially as more retail dispensaries become licensed and more grow operations shell out product. As of January 2, Michigan’s regulatory agency issued 54 recreational business licenses, including 26 to retail stores. In Illinois, sales for legal cannabis totaled a little more than $30.6 million for in-state residents for the entire month of January. Illinois sold another $8.6 million to out-of-state residents, totaling over $39 million during its first month, notably higher than Michigan’s revenue.

Illinois Appealing to Out-of-State Customers

One reason that Illinois greatly surpassed Michigan in its weed sales could be due to Illinois’ advantageous geographical position. Its bordering states (Iowa, Indiana, Wisconsin, and Kentucky) have extremely restricted cannabis laws and have completely outlawed the plant for recreational use and have only limited medical laws on the books. This means more out-of-state residents will be drawn to Illinois’ relatively easy access to recreational weed. Illinois is a much more central state than Michigan, largely because Michigan is surrounded by water, and Illinois will be able to take advantage of this position for a while to come, as many of the states surrounding Illinois are unlikely to pass wide-ranging recreational marijuana bills for some time.

A Look at the Licensing Process

We can also look to the licensing and regulation process of the two states to see why Illinois reaped much more revenue than Michigan. Illinois’ licensing process is two-fold: first, the existing medical dispensaries could apply for recreational licenses and were able to begin selling to recreational patients beginning January 1, which was the first date people could legally possess marijuana in the state, per Illinois’ Cannabis Regulation and Tax Act. This means that more than 40 dispensaries were open and operating to eager customers on January 1. In May 2020, the state will issue licenses to “new” cannabis companies, i.e. businesses who were not already in the medical marijuana business prior to the passage of the act mentioned above. Illinois put in place a system to allow customers to immediately access legal marijuana (though given the fact that dispensaries are licensed first, before grow operations, means there is and will continue to be a product shortfall, which Illinois is painfully seeing the affects of now).

Michigan, on the other hand, issued only 4 recreational licenses as of December 1 when recreational sales began. The state has been gradually approving additional retail licenses (there are 43 issued at the beginning of February), but it did not seem ready with the appropriate number of dispensaries open, and sales suffered as a result. However, a longer-term look at the state’s licensing process may be an issue for Illinois. The state will award 75 licenses by May 2020 with an additional 110 licenses awarded after January 1, 2021. This totals 185 licenses by the end of next year, if the timelines aren’t altered. Additionally, the cannabis act caps the total number of dispensaries in the state to 500. In comparison, Colorado currently has over 520 operating dispensaries and the population (5.7 million people) is significantly lower than Illinois (12.7 million people). Similarly, Oregon has over 400 dispensaries with a population of 4.2 million people. Looking at these numbers, it’s clear that Illinois could stand to have more dispensaries open without an issue selling the product. If Illinois really wants to bring in substantial revenue from the sale of legal weed, revisiting this dispensary cap is certainly a good place to start.

Seed To Sale Funding™ is a Troy, MI-based consulting firm that raises debt capital for all facets of the cannabis industry, including grow/cultivation, processing, testing, retail, and secured transportation, and craft/microbusinesses. Since bank loans are not readily available for the hemp and cannabis industry, we primarily work with a network of private sources ranging from wealthy investors, family offices, private lenders, and hard money lenders. We place loans nationally wherever cannabis is legal, including Illinois, Michigan, Oregon, Maine, Oklahoma, Vermont, New Hampshire, Rhode Island, Delaware, Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, Maryland, Ohio, West Virginia, Missouri, Alaska, Minnesota, Louisiana, Florida, Arkansas, North Dakota, Colorado, New Mexico, Utah, Arizona, Washington, Oregon, California, and Nevada. Whether you are an owner of a single-location dispensary, a large multi-state operator, or anything in between, we have secured loans programs to suit your needs. Learn more at www.seedtosalefunding.com, or apply for financing here.

Seed To Sale Funding™ Places Cannabis Commercial Loans

Seed To Sale Funding™ Places Cannabis Commercial Loans Throughout the US

The cannabis industry continues to grow at record levels, employing and estimated 211,000 people last year. Retail sales for cannabis are expected top 30 Billion by 2025.  Entrepreneurs in the 35 states where cannabis is legal are experiencing a one-in-a-lifetime opportunity to capitalize on a high-growth industry that helps support their communities and well-being of its residents.

Seed To Sale Funding™ is proud to offer support for these far-sighted entrepreneurs.  Whether you are an owner of a single-location dispensary, a large multi-state operator, or anything in between, we have secured loans programs to fit your needs.

Highlights of our new national lending program are as follows:

  • Available wherever marijuana is legal, including the states of Illinois, Michigan, Oregon, Maine, Oklahoma, Vermont, New Hampshire, Rhode Island, Delaware, Massachusetts, Connecticut, New York, New Jersey, Pennsylvania, Maryland, Ohio, West Virginia, Missouri, Alaska, Minnesota, Louisiana, Florida, Arkansas, North Dakota, Colorado, New Mexico, Utah, Arizona, Washington, Oregon, California, Nevada, and throughout Canada.
  • Loans are typically secured by hard assets such as real estate or equipment.
  • Purchase order and invoice factoring is also available.
  • Applicants are subject to approval by the lender.
  • Brokers and investment banks welcome, we gladly share fees for the right deals.

About Seed To Sale Funding™: We are a consulting company that raises debt capital for all facets of the hemp and cannabis industry, including grow/cultivation, processing, testing, retail, and secured transportation. Since bank loans are not readily available for the hemp and cannabis industry, we primarily work with a network of private sources ranging from wealthy investors, family offices, private lenders, and hard money lenders. 

Apply for real estate financing

Apply for equipment financing

Apply for purchase order/factoring

Brokers/investment bankers inquire here

A Tale of Two States

A Tale of Two States

In the Mitten State…In just a few weeks, the State of Michigan begins accepting applications for recreational marijuana licenses.  The current legislation favors those who already have medical licenses since others cannot apply for recreational licenses for two years.

The upside for the market is enormous.  There are currently almost 300,000 medical users in the state, most of which likely convert to recreational users beginning early next year, when the legislation becomes fully operational.  Some estimates have MJ sales in the state topping $2 billion annually. That prediction is because Michigan is the second-largest medical marijuana in the country. By comparison, Colorado, which is the oldest marijuana market in the nation but 4.3 million fewer residents, surpassed $1.5 billion in sales in 2018.

Michigan is also experiencing a serious shortage of medical-grade, legal flower.  This shortage is causing prices to continue to rise. Currently wholesale prices are around $4,000 per pound, contrasting sharply with Colorado’s $1,000/pound wholesale price.

Michigan growers need to be cautious regarding the current inflated prices, however. As more and more growers come on line, prices are expected to drop.  A well managed grow operation should still be very profitable, even at a lower price point. 

Meanwhile, in the Land of Lincoln…Last week, Illinois began accepting applications for dispensary licenses. The state has not yet begun licensing new large grow operations. Based on what we’ve seen in Michigan, which followed a similar timeline, this will create large shortages in the Illinois, as well.

This situation could result in an ideal situation for cultivators. In the first few years of the program, Illinois grow licenses will likely prove especially lucrative. Cannabis shortages drive up the cost of wholesale product and allow growers to sell their harvests easily. This is the perfect storm for generating huge profits at the grow level.

The Take Away

In both Michigan and Illinois, the window to take advantage of this product shortage won’t last forever.  Having an extra year or so of high-margin sales can allow your cannabis company to capture these profits and build financial resources for future growth.  For this reason, consider using cannabis real estate loans and cannabis construction loans to kick off your project sooner vs. later. We have several lenders who can close and fund real estate loans for cultivation facilities within 30 days, which allows our clients to take the fullest advantage of today’s wholesale prices.

At Seed To Sale Funding, we maintain relationships with over 20 cannabis private money lenders, family offices high net worth individuals and others, who lend their own money, make their own decisions, and therefore can make cannabis loans that banks cannot.  Transactions include cannabis real estate loans, cannabis construction loans, sale/leaseback transaction, working capital, and acquisition financing. Many of these loans are available for marijuana startup financing, including new cannabis grow facilities, while others are more suitable to established businesses.  

Contact us today and let us assist you in raising the cannabis debt financing that your business needs.

Judy Rinkus is a former bank executive who is CEO and Founder of Seed To Sale Funding, a unique consulting firm specializing on providing debt capital to marijuana and hemp businesses located in the United States and Canada, including both Michigan and Illinois.  

Don’t Bank on the SAFE Banking Act

Don’t Bank on the SAFE Banking Act

Last week, The House of Representatives passed the long-anticipated Secure and Fair Enforcement (SAFE) Banking Act. If enacted, the Act will protect banks and credit unions from being targeted by the federal government for providing services to the marijuana industry.  The Act passed the House by an overwhelming margin of 321 to 103, and now heads to the Senate. Unfortunately though, many commentators feel that the odds that the Senate will pass the bill are fairly low. 

Despite the likely challenges in the Senate, it’s no surprise that the cannabis community was euphoric when the Act passed. Our clients often tell us that their number-one business concern is the lack of banking and business loans.  Currently there are only a few banking institutions (typically, small banks and credit unions) which will allow marijuana-related businesses, or MRB’s, to maintain banking accounts and process cash transactions. The major credit card companies, such as MasterCard and Visa, do not allow MRB’s.  These limitations force many MRB’s into a cash-only environment. This not only presents security and compliance issues to the business itself, but also encourages money laundering, crime and fraud, creating a public policy issue to society at large.

Even if SAFE banking does become the law of the land, how much will really change?  The answer is, probably not much.

First, realize that just because a bank is allowed to offer MRB accounts doesn’t mean that it will.  Banks have complicated decision-making practices and loads of compliance issues, and the bigger the bank, the more complicated the policies are. Therefore, don’t expect large national banks to offer accounts any time soon.  Smaller banks and credit unions are usually more nimble and may jump on the bandwagon sooner.

Second, all banks maintain a list of what are called “High-Risk Industries”.  Banks offer accounts to these industries on a very selective basis, and usually charge higher fees.  The industries on this list are surprisingly diverse, and range from mainstream business such as staffing companies and payroll processors, to traditionally “shadier” enterprises such a pawnshops and casinos.  The reasons that a particular industry is included on this list could range from objective reasons, such as a propensity for money laundering, to subjective reasons such as “Headline Risk,” or the risk that the bank’s name might garner negative publicity.  It is likely that marijuana-related businesses would be placed on this High Risk Industries list at many banks, which may continue to limit these accounts.

Third, the passage of the Act is unlikely to change the banking industries’ appetite for cannabis business loans.  Regulated banks in the U.S. are among the most conservative lenders in the country. One the other hand, the marijuana industry is arguably one of the riskier industries around, since the industry is still quite new and therefore unproven. For this reason the banking industry will continue to tread very carefully in this space for some time to come. 

So, were does this leave a marijuana business in need of banking services and capital?

At Seed To Sale Funding, we maintain relationships with over 20 cannabis private money lenders, family offices high net worth individuals and others, who lend their own money, make their own decisions, and therefore can make cannabis loans that banks cannot.  Transactions include cannabis real estate loans, equipment loans, hemp purchase order financing, working capital, and acquisition financing. Many of these loans are available for marijuana startup financing while others are more suitable to established businesses.  For vetted lending clients, we also offer referrals to MRB-friendly banks and credit unions for bank accounts.

Contact us today and let us assist you in raising the cannabis debt financing that your business needs.

Judy Rinkus is a former bank executive who is CEO and Founder of Seed To Sale Funding, a unique consulting firm specializing on providing debt capital to marijuana and hemp businesses located in the United States and Canada. 

_ESTATE PURCHASE AGREEMENTS

Welcome to the new Seed to Sale Funding (SSF) blog!

Our mission here will be to inform, educate and even inspire those who have taken a bold step into the booming hemp and cannabis industry. Be sure to stop back regularly as we explore current topics on business trends and best practices among hemp and cannabis growers, producers and retailers.

SOME CURRENT FACTS

It’s no secret that legal marijuana sales have emerged as one of America’s top growth industries. According to a recent March 2019 article on FitSmallBusiness.com, 43 of the 50 states in the U.S. allow some form of marijuana use. The majority of that number currently restrict use to the medical marijuana side, but the across-the-board legalization states club has now grown to 10: Maine, Vermont, Massachusetts, Colorado, Nevada, California, Washington, Oregon, Alaska and our own Michigan. 
Regulated dispensaries continue to open throughout this group of states, and reveal this article’s most compelling statistics: at an average startup cost of around $800,000, these facilities generate a profit of nearly $1.1 million on revenues of around $3 million. At a projected 2018 growth rate quoted on The Motley Fool’s fool.com website of 42%, those figures will only continue to make the business community take notice.

LEGISLATIVE HIGHLIGHTS

With Gallup reporting that 66% of Americans now favor some type of cannabis legalization, efforts to reverse the Fed’s listing of marijuana as a dangerous Schedule 1 drug are continuing. An April 2019 article on theverve.com highlights two of the most promising initiatives being debated: the Ending Federal Marijuana Prohibition Act and the SAFE Banking Act. The former would remove marijuana from the Controlled Substances Act, while the latter would allow banks and credit unions to conduct normal business with cannabis companies without Federal intervention. These will both be hot topics as the 2020 presidential election cycle approaches.

SUCCESS IN THE CANNABIS INDUSTRY

As cannabis businesses emerge from the unregulated black market into a top worldwide growth industry, there are many compelling success stories to be found. An excellent April 2018 article on forbes.com highlighted best practices from cannabis industry entrepreneurs, including these that apply to every successful operation:

  • Stay focused on your original course
  • Hire great people
  • Legal and regulation compliance is mandatory. No shortcuts!
  • Build your personal financial capacity or get with a team of investors
  • Be a good neighbor as part of your community

SSF’s mission is to provide professional and creative financing solutions for individuals and companies at all stages of experience and expertise in the cannabis business. email us at info@wordpress-269725-1484358.cloudwaysapps.com to discuss a variety of issues, including small business startup loans, business acquisition loans, lab equipment leasing, real estate project funding, and full range of term loans for cannabis extraction machines, hemp farming equipment, greenhouse financing and marijuana packaging machines.

Top