“Of course, banking is not as widely available in the industry as we would like it to be, and there are some unique challenges when it comes to cannabis financing. Still, it is important for everyone to be aware that we already have access to capital readily available, and we should be using that access to the full extent,” says Adam Stettner, Founder, and CEO of FundCanna. The company was created to help all segments of the cannabis sector with access to flexible capital solutions. “While each level of the cannabis supply chain has shared financing challenges, there are also some unique challenges that are important to take into consideration.”
Adam Stettner
Unique challenges for cultivators
To explain the unique challenges in the cannabis supply chain, Stettner takes cultivators as an example. “Cultivators do share some financial challenges with manufacturers and retailers, for example. Cultivators are unique in the sense that they have a long timeline to go from clone/seedling to a crop they can monetize. This creates a big challenge, as it requires a steady outflow of money to nurture their crop and business before they receive any inflow of cash. This manner of outlay and receipt of money provides a unique challenge for cultivators.” Stettner explains, however, that these are exactly the types of challenges FundCanna was formed to help solve. “We want to give them access to capital that helps solve this challenge by having the flexibility to match their growth cycle.”
Especially when it comes to smaller and emerging cannabis companies, Stettner explains that debt is a great accelerant for business growth. “A business needs money. Debt as a form of access to capital is a great way for growth. Unlike equity, debt is in the control of the operator. You can borrow, and once you have repaid, the obligation is gone. If you take equity, on the other hand, there is no way for it to end. Once you’ve taken equity, you have given a portion of your business away. In my mind, that’s the most expensive capital you can obtain, as you can never get that equity back. When used properly, debt is the ultimate business partner as it has no say over what you do. And once repaid, you have everything back to yourself again.”
Focusing on the positive
Concerning any possible relief for cannabis banking in the US, Stettner explains that the future is very hard to predict. “We have had the SAFE Banking Act pass in Congress multiple times now, and we have even had presidents indicating they’re waiting to see something. But while there is the support, it still has not happened yet. Still, we are hopeful and eager to see something pass, as it would mean more safe depository business. The more available that is, the easier it also is for us to facilitate movement of money or access to capital.”
Despite the fact that the SAFE Banking Act has not yet passed, Stettner emphasizes that there is still much positive to focus on. “Of course, banking is not as widely available as we would all like to see it. But it’s important for the industry to be aware that it is quite readily available. In our experience, the vast majority of the industry is banked. With there being companies out there providing banking to the cannabis industry, we should be using that access to the fullest extent. The SAFE Banking Act would relax the restrictions and added costs, so it’s still important and beneficial that it passes. But in the interim, let’s focus on what opportunities are already available and make the most of those.”
Shaped to the cannabis industry
After providing access to capital for over 20 years, Stettner has noticed that small businesses are, to a large extent, underserved and underbanked. “The cannabis industry is even more underserved than others, as it is still federally illegal. That is precisely why FundCanna was formed, with a mission to service the underserved cannabis industry with flexible renewable access to capital. With the experience of $20 billion in lending and having underwritten over a million files, we can apply our expertise and know-how to an industry that needs the help. Rather than having a box and asking the cannabis industry to fit our box, our lending strategy is aimed to understand the needs of the industry and adapt to that.”
For more information:
FundCanna
www.fundcanna.com