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Dispelling the Myth with Seed to Sale's Judy Rinkus

February 12, 2021 3:17 pm
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Dispelling the Myth with Seed to Sale's Judy Rinkus

“You can’t get loans in the cannabis industry,” is a response many folks looking to break into the marijuana business have heard on loop like a broken record. But Founder and CEO of Seed to Sale Funding Judy Rinkus plays a different tune. 

All in the Name

Seed to Sale Funding provides loans from a curated network of private lenders to established entities and startups alike. By supporting projects like cannabis cultivation, dispensaries, processing and testing laboratories, it’s clear that the company really does intend to fund its clients from seed to sale. 

Rinkus got her start in finance as a commercial banker, lending to middle-market businesses. After 30 years she left the world of banking because, in her own words, “I was tired of working for The Man — quite literally.” When Rinkus switched over to consulting, she began receiving requests about accessing and providing funding for cannabis companies. The myth at the time was that it just wasn’t an option. This piqued Rinkus’ interest, and sensing a niche position in the market, she decided to take it upon herself to change the narrative. 

Over the course of about three months, Rinkus connected with 20 private lenders, many with whom she had established strong relationships from her prior career, and Seed to Sale Funding was birthed. 

Lending a Hand

So what types of loans are offered? There are four basic types: real estate loans for construction, purchase or cash-out, which ranges from $500,000 to $20 million and can be written for startups through mid-stage concerns, real estate/leasebacks, which are more appropriate for established businesses, purchase order financing and working capital financing. Loans carry rates between 8% to 14% and start at a minimum of $500,000.

One of the most notable details about the loans provided by Seed to Sale is that they are all non-dilutive — the lender does not take an equity stake in the business. The loans are coupon-based. “They don’t ever want to own your company,” Rinkus said about her lenders at the Benzinga Cannabis Conference in Detroit. “And we can close within 30 days.” Another attractive attribute for any business looking to manage debt. 

Seed to Sale is a fairly new company having only begun in 2019. But since its inception, it has closed upward of $45 million in loans, making the company a leader in debt financing for the cannabis industry. The current pipeline is about $75 million in vetted deals, which should close by mid-2021.

Tips for Borrowers

Just as with traditional commercial loans, it’s crucial that the sponsors have good personal credit and strong liquid assets.  Borrowers also need to be aware that no loan will supply 100% of what is needed for a project. Therefore, sponsors must be prepared to fund at least 30% to 50% of the overall need. 

During the Benzinga Cannabis Hour, Rinkus was asked what she’d tell a young cannabis entrepreneur. Her quip was, “Make sure you have money. I can only supply so much.” She followed up with advice, “Get some industry experience or bring people in to do that. If you’re not strong at something, fill in with some experts. Don’t try to be the expert at everything.”

Winds of Change

As a boutique consulting firm servicing an important niche cannabis capital stack, Seed to Sale is currently thriving with little to no competition. But recent changes in the U.S. administration could influence that. 

One of the biggest challenges that cannabis companies face is the inability to have accounts with national banks. But as Democrats have taken back the White House and flipped the senate, many predict that national legalization is just around the corner. This poses the possibility of banks like Chase and Bank of America becoming more accessible to those in the cannabis industry. 

Rinkus is confident in a much slower timeline, however. She thinks it will take several years for banks to get on board with lending to cannabis companies. “Right now, they’re not even supposed to open certain accounts, so lending money is a whole other thing.” 

The Seed to Sale team members combined boasts more than 100 years of experience in commercial lending. “We speak lender,” Rinkus summed up. So while there will no doubt be competitors eventually, with a century’s worth of experience, who could compete with that?

Seed to Sale Funding is based in Troy, Michigan. Visit its website www.seedtosalefunding.com and be sure to check out Rinkus’ blog for the most up-to-date news. 


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