Committee Insights | 12.7.22 | How To Use A Marketing Mindset To Raise Capital For Your Cannabis Company
NCIA’s #IndustryEssentials webinar series is our premier digital educational series featuring a variety of interactive programs allowing us to provide you timely, engaging and essential education when you need it most.
In this edition of our NCIA Committee Insights series, originally aired on December 7 and produced by NCIA’s Marketing & Advertising Committee, our panel of cannabis finance specialists, leading operators and capital raising experts will guide you through best marketing practices and considerations to deploy when fundraising in the cannabis industry from a marketing perspective.
Learn tips and tricks and do’s and don’ts from marketing pro’s and industry insiders to best position your company to get the attention of investors in the current market conditions just as you’ve done when targeting consumers.
Service Solutions | 10.26.22 | Show Me the Money – The Current State of Cannabis Lending
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, October 26, 2022 we were joined by the experts from cannabis-focused financial institutions FundCanna, Safe Harbor Financial, and AVANA Companies to dive deep into the current state of cannabis lending with leading industry journalist John Schroyer of Green Market Report.
A decade after California and Colorado became the first adult use states, the regulated U.S. cannabis market encompasses over 70,000 cannabis-related businesses. Shockingly, most of those businesses still lack easy access to debt and other forms of growth and operating capital. From federal prohibitions and the impact of IRS regulation 280e, to state and local taxation issues, the costs of operating a regulated cannabis company continue to remain nearly unendurable.
Learn what may change in the coming six to 12 months so you’ll know how to access debt capital most cost-effectively in this ever evolving environment. No matter your place in the industry or the supply chain from cultivators, manufacturers, vendors, suppliers, distributors and retailers this conversation will provide the insights to meet your financial needs.
At the conclusion of the discussion our panel hosted a moderated Q&A session to provide NCIA members an opportunity to interact with leading minds from the financial services space, join today to contribute to future conversations!
Panelists:
Adam Stettner
Founder & CEO
FundCanna
Sundie Seefried
Founder and CEO
Safe Harbor Financial
02:13 – Equity vs. Debt: With equity dried up, should cannabis companies be looking at debt financing to grow now?
07:28 – Equity vs. Debt: What do borrowers need to do before approaching a debt provider (vs. an equity provider)?
13:25 – Equity vs. Debt: What can cannabis companies or entrepreneurs do to improve their overall credit worthiness prior to seeking capital?
17:16 – How has the interest rate increases by the Federal Reserve impacted capital markets (and the industry at large) in 2022?
26:07 – Audience Q&A: “If there’s “no reason not to have banking” for your cannabis business how can I easily (and inexpensively) establish and maintain a compliant bank account?”
28:56 – Lending: What significant lending challenges are your clients currently facing within the industry?
33:56 – Lending: What advice can you provide business owners for evaluating lenders that you should (or shouldn’t) work with and tips for avoiding predatory lending practices?
39:05 – Cannabis Reform: What impact do you expect President Biden’s recent announcement will have on the industry?
49:32 – Audience Q&A: “Are your financial institutions planning to offer lending and banking services in New York, New Jersey and other new markets?”
51:42 – Audience Q&A: “With the mindset of “Investors are betting on the Jockey not the Horse.” What type of CEO or founding team would be a red flag or not a viable investment?”
55:19 – Audience Q&A: “How can I start to shift my retail company from being primarily a cash-only business?”
The state-by-state level of legalization and expansion of cannabis continues to pick up momentum across the United States, however, the adoption at Federal level is a much slower movement. The absence of federal legalization has created a situation where federally insured lending institutions like banks and traditional investment capital markets are prohibited from funding cannabis projects. The direct result of this restriction in capital has historically forced the cannabis industry to rely exclusively on private loans and individual investors as the primary sources of development and operating capital. These sources of capital are limited in capacity and can garner interest rates from 15-25%. While the legalized cannabis industry has made great strides in removing much of the negative stigma surrounding the products and their uses, resulting in the opening of some additional funding sources such as crowdfunding and angel investors, the cost of these capital sources is still significantly above the conventional market rates. At Ebee Management Group, we would argue that the most underutilized yet best financing tool presently available for the cannabis industry is the Commercial Property Assessed Clean Energy (C-PACE).
C-PACE is an innovative financing tool that gives owners of commercial, industrial, and multi-family properties access to long-term fixed-rate financing for energy efficiency, water conservation, and renewable energy projects. The C-PACE legislation authorizes municipalities or counties to partner with private capital providers to deliver financing options to commercial property owners for energy qualified improvements with the collection of the debt repayment through a special assessment on the property’s tax bill. The C-PACE funds provide upfront capital with 100% financing for qualified improvement often with terms up to 20 years. The resulting energy savings and reduced operating and maintenance costs typically exceed the amount of the assessment payment and often contribute to a positive cash flow to the operating budget.
The primary caveat to the use of C-PACE for cannabis is that the property must be in a state that has passed the legislation that empowers local municipalities to provide C-PACE as a funding tool. C-PACE can be funded directly by the municipality through a bond issuance; however, most projects are presently being funded by the private equity markets. Typical terms on a C-PACE-funded cannabis transaction are 100% financing, fixed for a term up to 20 years at interest rates ranging from 7%to 9%. The maps below illustrate the current enactment of state-level policy for both cannabis and PACE.
Map provided and maintained on the PACENation website
C-PACE can be utilized for any improvement that saves energy with maximum lending limits influenced by individual state legislation and program guidelines. Typically, the maximum loan amount is capped at 20-25% of the completed appraised value and restricted to funding only qualifying improvements. Typical qualified improvements include lighting, HVAC systems, and building controls, doors, windows, roofs, and alternative power generation like wind and solar. PACE can be used for retrofitting an existing building, new construction, and in some states, refinance of existing debt. For the established cannabis market, the refinance option is an extremely attractive tool because it can be utilized to pay off higher-cost investor debt and is non-recourse to the owner. The debt is tied to the physical facility as a special assessment, not a mortgage lien, and is thus fully transferable at sale. You heard me right. If you have a short-term hold strategy for a facility, any remaining obligation you have associated with your PACE assessment does not have to be paid off at closing. The balance of the debt follows the tax bill and transfers directly to the new owner like any other existing tax-based assessment.
The table below outlines the benefits and features of C-PACE
Owner Benefits
Financing Features
Qualified Equipment
• Lower cost capital
• Non-recourse to owner
• Preserves owner’s capital
• Debt transfers at sale
• 100% financing of qualified improvements
• Long-term fixed-rate up to 20 years
• Competitive interest rates ranging from 6.5%-9.5%
• Debt securitized by a special assessment on the property
• Lighting
• HVAC
• Controls
• Roofs
• Doors & Windows
• Insulation
• Power factor conversion
• Alternative energy generation
The future of a wider array of funding options for the cannabis industry will clearly be impacted by both the ongoing adoption on a state-level and the possible federal-level legalization. Presently the pressure from states like New York and Chicago that house the two largest capital markets in the United States is leading to the expanded conversations about tapping into some of these sources of capital. That being said, arguably the best real-time solution for structuring a cannabis capital stack is C-PACE. New construction, building retrofit, or refinance, C-PACE can fill a gap or serve as a lower-cost replacement of other investment capital or equity.
Dr. Teresa Smith leads the Strategic Growth & Development for Ebee Management Group where she is recognized as an industry expert in sustainable development, leveraging PACE financing solutions for qualified energy efficiency projects throughout Ohio and Michigan. Prior to joining Ebee in 2019, Teresa was the Business Development Manager for the Toledo-Lucas County Port Authority where she built a robust growth process that delivered a 280% annualized increase in Property Assessed Clean Energy (PACE) loan transactions, driving loan balances from $3 million in 2011 to $47 million in 2019. Teresa obtained a Bachelor Degree in Economics from Eastern Michigan University, a MBA in Executive Management from the University of Toledo and a Doctorate Degree in Business Management with a specialty in Leadership from Capella University.
Ebee Management Group is a full-cycle construction, finance, and energy management firm, offering our clients the most cost-effective and appropriate development strategies — never compromising integrity and quality. We oversee every aspect of the project with a proprietary process and unique energy financing programs, delivering a custom designed, state-of-the-art energy savings solution with a guarantee to save you time, energy, and money. Ebee offers a wide array of financing solutions for the Cannabis Industry that reduce equity requirements and replace much more expensive sources of capital. Our flagship financing tool for new construction, renovation and refinance of commercial facilities is Commercial Property Assessed Clean Energy (C-PACE). This financing tool makes it possible for owners and developers of commercial properties to obtain low-cost, non-recourse, long-term financing which is paid back through an annual assessment on the organization’s property tax bill. For more information, contact Teresa Smith at 419.340.0420, tsmith@ebeeco.com or visit our website athttps://www.ebeeco.com/
Member Blog: Common Cannabis Capital Cadence
by Sumit Mehta, CEO of MAZAKALI
NCIA’s Finance and Insurance Committee
Companies often benefit from capital infusions that can help them grow their businesses. When and how much capital to raise is a common question, once that is best addressed by balancing need for cash with dilution of equity. This article outlines typical stages for corporate growth along with potential sources of capital and required documentation along the way.
Common Cannabis Capital Cadence
Introduction
While a business does not need to raise money to be successful, one of the primary reasons businesses fail is that they run out of money. Businesses that do need money to survive or to accelerate growth can benefit from outside capital balanced by the related loss of ownership. Effective capital management is thus crucial to business growth and success.
Access to necessary capital can be a significant challenge, as money is cheapest to borrow when you least need it. Access to liquidity, while difficult in any industry, is even more challenging in the cannabis industry for a myriad of reasons. Despite these challenges, cannabis capital infusions are at an all-time high. Companies are well-served to be focused on ‘capital readiness’ well in advance of their desired capital needs.
The true entrepreneur does more and dreams less
Fail to prepare and you may be preparing to fail. Maintaining focus on cash needs and related documentation at every stage of your business growth is crucial to its ultimate success.
Idea Stage – Founders
A founder collaboration agreement can help lay out a working agreement along with conflict-resolution steps for future disputes. A common stock purchase agreement is a binding contract which highlights basic terms for the sale of shares to founders. This agreement will define the parties, the shares to be sold, the purchase price, the timing and method of payment, and the closing date. A shareholder agreement typically accompanies the stock purchase agreement and highlights shareholder rights, pricing mechanisms, voting arrangements and shareholder privileges and protections.
Documentation: Founder collaboration agreement, common stock purchase agreement, shareholder agreement.
Early Stage – Friends & Family
Friends and family can be some of the easiest sources of capital. They are typically more forgiving about business ups and downs, and having a resourceful network of trusted early investors is a good step towards securing money from future investors. It is common to use convertible notes at this stage, and relevant here are a convertible note purchase agreement along with a board of director consent. The intention of this note is that it converts to equity when the company conducts an equity financing.
Documentation: Convertible note purchase agreement, board of director consent.
Seed Stage – Angel Investors
An angel or seed investor is an affluent individual who provides capital for a business start-up, usually also in exchange for convertible debt. An advantage of this type of financing is that it is less risky than debt financing. In the event of business failure, invested capital does not have to be paid back. In addition to the documentation above, most angels will want to see a business plan and a pitch deck.
While the term ‘Venture Capital’ broadly applies to any capital provided to a venture, it typically describes a structured institutional scenario. Advantages of venture capital include amounts typically larger than angel funding rounds along with valuable information and resources that can contribute to business success. Challenges here include the length and complexity of the diligence process along with the documentation burden as highlighted below.
Documentation: A robust data room that includes the above documents along with a 5-year pro-forma model, cap table, valuation, subscription agreements, stock purchase agreements, incorporation documents & bylaws; and vendor, contractor & employee agreements.
Growth Stage – Private Equity
Private equity investments typically result in either a majority or a substantial minority ownership stake in a company. These generally come with strings attached, which can be wound tightly at times. While private equity offers the opportunity to raise large amounts of capital, it is also often accompanied by a loss of control. In order to amplify returns, private equity firms typically raise a significant amount of debt to introduce leverage into the transaction. This has helped coin the term ‘Leveraged Buyout’.
Documentation: A robust data room as above with PE specific documents that may include supply chain verification, tax and audit, legal reviews, intellectual property opinions and management team background checks.
Final Stage – Public Equity
A substantial increase in liquidity is one of the main advantages of this final stage of liquidity. Other advantages include increasing brand and prestige, attracting employees with a stock option plan, and making acquisitions with company stock. Going public is no easy task and requires a large absorption of new obligations, including filing SEC reports, getting shareholder approval for corporate actions, additional legal liabilities and other regulations as introduced by the Securities Act of 1933 and its many subsequent amendments.
Documentation: In addition to compliance with Regulation FD and Sarbanes-Oxley, filing and reporting requirements include annual reports, quarterly reports, proxy statements and insider holding filings.
Conclusion: A sustained and successful capital cadence raises investor confidence and subsequent recommendations to others. Determining a timeline for liquidity is the cornerstone of capital raise decision-making, and a plan created with financial rigor is useful for management and investors alike. While the preservation of liquidity is of primary importance, this is best balanced by the desire to retain ownership and control. When and how to raise money are amongst the biggest challenges for any business, and preparation is paramount to the capitalization of the arrival of opportunity.
Chance often favors the prepared.
In addition to his role as Founder and CEO at MAZAKALI, Sumit is a consultant to The Arcview Group and the Managing Partner of Emerald Ventures. A frequent speaker at investment seminars, Sumit acts as a mentor to Arcview and Canopy companies and serves on the Canopy Investment committee as well as the NCIA Finance & Insurance committee. Sumit and MAZAKALI support NCIA, the Marijuana Policy Project and Students for Sensible Drug Policy.
Sumit has earned an MBA from the University of Michigan, a BA in Economics with Honors from the University of Texas and currently holds Series 7, 63, 65 and 79 licenses. He resides in San Francisco where he enjoys riding his motorcycle, yoga, and craft beer.
Member Spotlight: Tidal Royalty Corporation
In this month’s member spotlight, we hear from Paul Rosen, CEO of Tidal Royalty Corporation, a Toronto-based company providing financing for U.S. licensed cannabis operators looking to expand their operations.
Cannabis Industry Sector: Finance and Investments, ExpansionCapital Provider
NCIA Member Since: 2018
Tell me a bit about your background and why you launched your company?
I am a lifelong entrepreneur, having started my career as an attorney with my own firm before founding a number of companies in different industries. Within the cannabis industry, I was the co-founder of The Cronos Group (NASDAQ:CRON, CRON.V), a company that I led as CEO and President for 3 years. I am also a very active investor with over 100 investments in cannabis companies globally, I serve on the Boards of iAnthus Capital Holdings (IAN.C) and Hill Street Beverages (BEER.V), and I am an advisor to numerous companies in the industry.
I see a lot of similarities between U.S. cannabis today and the Canadian markets from 5 years ago, especially around the massive capital investments required to build out an industry of this magnitude. Unlike Canada, however, the lack of access to traditional capital markets makes it much more difficult for licensed U.S. operators to build the scale they will need in order to compete globally. I founded Tidal Royalty Corp. (CSE: RLTY.U) (OTC: TDRYF) to fill this market need and to provide growth-minded entrepreneurs with the resources they need to build sustainable businesses that positively contribute to society.
What unique value does your company offer to the cannabis industry?
Tidal Royalty is a publicly-traded company that provides licensed U.S. cannabis operators with the expansion capital that they need to scale their business. We write institutional-level cheques in the $5MM – $25MM range and have a world-class executive team that can assess and close deals quickly. But what makes us most unique is that we provide financing in exchange for a royalty on future revenue. This is most attractive to entrepreneurs in high-growth industries – like U.S. regulated cannabis – in that they get the benefit of a large capital infusion without dilution, and without the risk associated with debt. We are looking to align ourselves with best-in-class operators that will form the future of this transformative industry: when they do well, Tidal Royalty does well.
Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does your company help work toward that goal for the greater good of the cannabis industry?
As institutional-level capital providers, Tidal Royalty has a level of responsibility that goes beyond our duty to be prudent stewards of capital for our shareholders. That is, we look to back licensed operators that we feel will positively impact the industry as a whole, in the U.S. and globally. We don’t see these as being mutually-exclusive; the operators that understand their social responsibilities and are willing to accept them are the ones that have the opportunity to make out-sized returns in the long-term. As part of our investment diligence, we not only assess the business case, but also look at how operators interact with their communities and the impact they can have on the segment of the population that they interact with. We think this is important in and of itself, but it’s also simply good business practice.
What kind of challenges do you face in the industry and what solutions would you like to see?
One of the most significant hurdles for many operators is the restrictive banking landscape. The legacy banking environment that discourages many institutions from participating in the regulated cannabis industry poses massive logistical challenges and business risks.
The industry as a whole is working hard to show the level of sophistication and societal benefit that a regulated cannabis market can offer, but the lack of banking infrastructure really creates an environment for criminal activity and black-market operators to flourish. Licensed operators can’t get access to the most basic banking services available to other industries and have to deal with the risks associated with a cash-only economy. I would like to see the states – either on their own or in partnership with private enterprise – really push an agenda to resolve some of these issues. There are a lot of good initiatives proposed that need to get pushed forward to make a difference.
Why did you join NCIA? What’s the best part about being a member?
We joined the NCIA to be part of a like-minded community working to advance the interests of this industry. The level of engagement, innovation, and enthusiasm we’ve experienced from the NCIA organizers and members has been incredible. We’re looking forward to helping contribute in any way that we can.
Member Spotlight: The Arcview Group
The Arcview Group, with CEO Troy Dayton
Member Since:
December 2010
Industry Sector:
Professional Services and Consulting, Investment and Asset Management
Tell me a bit about your background and why you launched your company?
Steve DeAngelo and I started Arcview in 2010 because we believed that business would ultimately become the single biggest factor in leading the end of marijuana prohibition — but there was a lack of leadership, professionalism, and scaling knowledge in the sector. We didn’t have all the answers, but we both knew a lot of the right people, so we surmised that if we structured a way for these parties to come together in a curated community around facilitating investment in the sector, we could ignite the power of free enterprise and aim its tremendous power towards political progress and the development of a new kind of industry.
I got my start in cannabis when I was a freshman in college at American University where I was one of the Marijuana Policy Project’s first volunteers in 1995, the year it was founded. I went on to intern for the Drug Reform Coordination Network at the dawn of the internet age where I helped start a project called U-net, which was a list-serve of college drug reform activists. Obvious thing to do now, but then it was revolutionary because it was the first time college activists could find each other and communicate easily. We rallied hundreds of activists behind a fellow student who was being kicked out of college for starting a marijuana policy chapter. It wasn’t long before we realized that it was time to start a more robust student drug policy organization. That began Students For Sensible Drug Policy which is now on hundreds of campuses nationwide and is a major force for political change.
Over the years, I helped start a digital video media company that was a cross between Youtube and Facebook. We raised millions of dollars but ultimately went “dot bust” because we were about 7 years too early with exactly the right idea. Then a few of us from that endeavor started a renewable energy company called Renewable Choice Energy, which was recently acquired by Schneider Energy 15 years later. I spent 3 years working with religious leaders and religious denominations helping them advocate for various drug policy reforms where I could. I spent two years as the Director of Development for the Multidisciplinary Association for Psychedelic Studies (MAPS). Just before I started Arcview I was the lead fundraiser for the Marijuana Policy Project.
I always felt like I had to choose between being part of the next business boom or fighting for what I believed in and remaining poor. I never in a million years believed that my work to end marijuana prohibition would have led to the next business boom. It didn’t occur to me until 2009.
What unique value does your company offer to the cannabis industry?
Arcview is the largest source of investment deal flow in the sector, and the publishers of the most trusted and best-selling market information. Our 600+ high net worth investor members have placed north of $150 million into 160+ cannabis related companies. We are the launch pad for companies seeking capital and mentorship, and for investors figuring out their investment thesis and developing relationships with the people they will need to make the most of this rare economic opportunity. As more investment conferences and pitch contests develop for the sector, and as more traditional investment gatherings start looking at cannabis, I think our biggest differentiator is our incredibly generous community. I’m astounded everyday buy the blood, sweat, and tears that our members put in to help each other and help these companies succeed. Unlike most investment conferences where almost everyone is there pretty much for their own self interest, at Arcview we’ve created a unique environment where people are also there for the benefit of the community, and for the love of the game. And we have a ton of fun.
Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does your company help work toward that goal for the greater good of the cannabis industry?
At every event we have a non-profit working to change the laws give a pitch to the members, and then I ask people to make commitments on the spot. We’ve raised more than $3 million for the cause during these efforts. And when people make their commitments they often say a few words about why. We make it clear at Arcview that if you are investing in this industry, you also need to be donating to the cause. It’s not just good for the soul, but it also make great business sense.
We are also a key place for organizations like NCIA and others that are advocating for good business practices and diversity in the industry. Steve DeAngelo and I both serve on the board of NCIA, and I serve on the board of the Marijuana Policy Project.
I also think that our unique community culture at Arcview helps create a new kind of industry, where people hug instead of shake hands, where they look into each others eyes instead of each others pockets, and where people get to bring their whole selves to their business and not just this plastic old school version of “professionalism.”
What kind of challenges do you face in the industry and what solutions would you like to see?
The very rapid reduction in the wholesale price of cannabis is both a huge opportunity and a huge challenge depending on where you sit and how you look at it. It’s going to be great for consumers, agricultural product creators, landlords and for the legal markets competing with the illicit markets. It will not be kind to small boutique growers and to the amazingly rich culture that has been built around small scale cultivation. There are some great companies helping people transition and coming up with cooperative models that will help boutique farmers compete. There are also efforts to brand those growers and maintain consumer support for more expensive cannabis where they feel connected to the cultivator.
Another big challenge we face is severely limited licensing that only benefits a few. This is particularly a problem in the Northeast, but also in some countries as legalization spreads. Limiting licenses is not a terrible idea if it’s within reason, but there are a few examples where it’s way too lopsided into just a few operators controlling a market. Many people think this is temporary, and that after federal prohibition ends these regulatory structures will loosen up. I’m not as optimistic. When only a very few benefit hugely, they are incentivized to hold on to that structure for dear life, particularly if it is helping to uphold unnaturally high pricing. We could see the federal government leave it up to the states and those states maintain those oligopolies. In fact, I think that is most likely.
But the biggest challenge we face is that people think we have already won and so they are not donating to change laws and they are forgetting that they are right now committing actual civil disobedience and are subject to arrest and imprisonment. Wake UP! If you are already “woke” on this point, then please go “woke” some other people. An industry with a 27% Compound Annual Growth Rate and a ton of enemies needs to be building a powerful and well-funded lobbying effort on the order of the gun, tobacco, alcohol, gaming, and pharmaceutical industries. But we aren’t even close. The fact that we have made so much progress with the tiniest fraction of those industries lobbying budgets is testament to just how right we are and what amazing advocates we have. But we are in the big leagues now and we need to swing like we are in the big leagues.
If you are not donating at least a percent or two of your revenue or amount invested, then you are riding coat tails and you are the reason we have not made additional progress. As the Beastie Boys said so eloquently, “You’ve gotta fight for your right to paaarrrrtaay!”
Why did you join NCIA? What’s the best part about being a member?
I was a founding board member of the NCIA because I believe we need a strong lobby advocating for our interests. I also wanted to make sure that we set the tone that this is not just an industry, but a political movement with social justice aims. NCIA is the perfect expression of those ideals. My favorite part of being a member is being on the board and getting to marvel at the amazing, quirky, fun, and incredibly accomplished women and men that lead this world-changing industry. It’s a true honor to serve along side them as we create jobs, wealth, tax money, health, and freedom.
Most business owners in the cannabis space will experience the need for capital to start or expand their business. While there are a variety of options when it comes to financing, there are a few important keys to being a smart borrower.
I speak frequently about the need to start the financing process off on the right foot. As a veteran of the commercial finance industry, I have helped dozens of cannabis businesses secure capital. The most common types of financing requests we see are for equipment, working capital, or real estate loans. I believe there are three P’s critical to getting financing to launch or grow your marijuana business: Plan, Prepare and Present to the right people.
Plan
During the planning phase, consider whether you’ll be seeking debt or equity. To understand which funding sources may be the best fit, start by asking yourself several questions. What will the money be used for? How much is required? What is the timeline to be able to repay the loan?
After answering a few important questions about your business and researching the types of financing sources available, decide whether a debt- or equity-based funding source is the best option.
Keep in mind, lenders look at things very differently than investors do. By nature, lenders are focused on the return on their investment with regular payments over a period of time at a set rate. This is different than an equity investor, who has a longer time horizon to be repaid and is seeking a significantly higher return on capital.
Prepare
Next, gather your financial documents, including your credit report, tax returns, personal financial statements, and any current company financials.
Consider having a CPA review or audit your financials before your meet with prospective lending sources, especially if you are considering debt-based options. Lenders are specifically interested in your balance sheet, income statement, and liabilities to confirm that you have the ability to repay your loan.
Once you have prepared your documents, it’s time to start formulating your business plan and executive summary for your presentations. An effective executive summary is a concise one- to two-page pitch describing your business, the funding you are seeking, and how the funding will be used. A 10-point guide to creating an effective executive summary is available here.
Present
Before you can present, you must have a solid grasp on your audience, which is why it’s important to determine early on the type of financing that may be suitable for the stage and trajectory of your business.
After identifying the appropriate financing source(s), it’s time to prepare for meetings. With your executive summary, business plan, and financials documents in order, you will be in a better position to make a good impression and obtain the funding you are seeking.
In my experience, answering questions directly and providing information quickly when requested are two keys to a successful meeting with a potential financing source. Lastly, ask thoughtful questions, such as “what are your funding criteria?” to help you learn more about what those funding sources consider important and to decide if you should continue to invest time and energy pursuing those relationships.
Scott Jordan is Director of Business Development for Dynamic Alternative Finance. He has arranged over $27 million in loans and equipment leases for cannabis business owners in the past two years. Scott is a commercial finance expert known throughout the marijuana industry. He has been interviewed by local TV and radio stations, authored articles and been a featured speaker at national conferences. Reach him at 303.754.2050 or s.Jordan@dynaltfinance.com.
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Dr. Teresa Smith leads the Strategic Growth & Development for 
