Funding for Cannabis Businesses: Equity is Not Your Only Option
Innovative Financing: Dynamic Funding, Inc.
By Scott Jordan
When Colorado legalized recreational marijuana, we started getting calls from local companies wanting to lease equipment as we appear high in the search engines for equipment leasing. I immediately realized that there was an underserved industry that could not get banks to even take their money, let alone lend them with the capital they needed to grow. So, I started working with some of these businesses that had the characteristics that we were looking for to get them the funding that they were seeking. We added working capital and real estate loans to our service offerings and through the syndication partners that we work with, we can now provide the full spectrum of debt based financing.
We provide access to working capital, real estate loans, and equipment financing for all types of businesses, including licensed marijuana businesses. Dynamic Funding allows business owners to obtain the capital they need to grow and expand their existing businesses without giving up equity, control, or prompting you to sell your soul… Ok, the ‘selling your soul’ part may be seem a bit far-fetched, but think about it. Say, you are an existing business with several locations and you want to build a multi-store operation in anticipation of a sale to a larger company. What are your options for seeking funding? Equity may be your first thought, but remember that it can be very expensive when it comes to a buy-out, especially if you are talking about a large multi-million dollar deal.
Say, you are an existing business with several locations and you want to build a multi-store operation in anticipation of a sale to a larger company. What are your options for seeking funding? Equity may be your first thought, but remember that it can be very expensive when it comes to a buy-out, especially if you are talking about a large multi-million dollar deal.
For instance, Green Smoke, a 4 year old $40 million vape company, was bought by Altria Group (NYSE:MO) in 2014 for $110 million. If they had given up 10% debt equity to get [let’s say] $2 million in working capital to grow, and they had that working capital for 2 years and paid 18% interest on that money, they would end up paying approximately $360,000 in interest, equaling a total of $2,360,000. On the other hand, if they gave away 10% of their company, it would end up costing them $11,000,000; therefore, receiving $11 million less at the time of sale. This is a huge premium to pay for equity and business owners need to consider that. Dynamic Funding’s services are catered to those seeking to grow and expand their businesses without giving up control of their company. There are many variables to think about: For example, did you know that the interest expense may even be considered tax-deductible?
Our ideal client is an existing profitable business with a good cash flow, a bank account to prove that cash flow, and someone that is seeking at least $250,000 to buy equipment to expand their cultivation facility and/or buy another store and have needs of remodeling it. If you are tapped out from the financial support of your friends and family and do not want to dilute your equity in exchange for capital, there is another option. If you’d simply like to acquire funding for expansion rather than putting the money you earned back into your business or if you’d like to purchase the building you’re currently leasing, there is great potential for us to work together.
I, myself, am a lot of fun to work with and I’m confident that my large list of clientele would second that! My goal is make the process easy and fast. The first step is to give me a phone call or send me an email. I’ll take your information and determine if you qualify for our services. If you are, I’ll submit your application for approval. Once you’re approved, I’ll present you with the term sheet, gather the rest of the documents, and either close your loan or lease or bring in one of my syndication partners to close and fund the loan. Either way, you’ll work with me and I promise to work diligently to get the best rate and terms for the funding you are seeking.
My goal is make the process easy and fast.
We have arranged $6 million dollars in working capital and equipment financing in the past 6 months and are actively helping existing marijuana business owners grow, expand, open more dispensaries, build out their cultivation facilities, help equipment suppliers sell more equipment, and help the economy overall. We are providing hope to the great business owners out there who are seeking to expand their operations and need the capital to do so. Our vision is to become the go-to resource for debt based funding. Just as entrepreneurs look at ArcView as the ‘go-to’ for start-up and venture capital, we would like to be considered the industry leader in the debt based space. We would also like to offer banks and credit unions the opportunity to partner with us in the future to expand our lending services.
The bottom line is that giving away control and equity of your company is NOT your only option. If you’re looking for alternative means to attain funding, we can definitely help. If you’re one of those smart business owners who wants to establish a relationship much like you would with a bank, but with private institutions, it’s a wise decision to start now while you’re growing. You need money to grow and certainly don’t need to sell your soul to do it! 🙂
Would you like to learn if you qualify for this type of alternative funding? Fill out this form or call 858.224.8733
Cover Photo Credit: Mishimoto
