The Hard Truths And Bright Spots Of Cannabis Lending Realities

The echoes of conversations at the recent Benzinga Cannabis Capital Conference in Chicago still resonate, painting a detailed picture of the industry’s financial narrative. Stalwarts Stephen Lenn, Michael Villapiano, Michael Hennessy, Judy Rinkus and Colin Bass dissected the intricate set of opportunities and challenges unfolding in the rapidly evolving cannabis landscape during an insightful panel discussion.

Stephen Lenn, managing partner at Brennan Manna Diamond, didn't mince words when he said, "The equity markets have pretty well foreclosed the cannabis industry for a couple of years. So the name of the game is debt." His view, imbued with the weight of experience and insights, encapsulated the transformation unfolding in an industry where equity was once the ruling monarch.

As we sift through the plethora of insights, Colin Bass's words stand out. In a tone tinged with cautious optimism, the president of Colin Bass LLC stressed the co-dependent relationship between the rescheduling of cannabis and the SAFER Banking Act, a mix of legalities and opportunities waiting to happen. "Wait and see," he said.

Vice president at Altmore Capital, Michael Villapiano‘s insights serve as a beacon, illuminating the prospective enhancement of the industry's creditworthiness. "Movements at the federal level," he said, hold the key to unlocking institutional capital, an essential catalyst to propel the industry forward.

Michael Hennessy, partner at Lineage Merchant Partners LLC, with an air of pragmatic wisdom, acknowledged the array of players in the credit space. Regulatory metamorphosis, in his view, will not instantaneously open the door to capital. The matrix of underwriting standards and credit assessments remains the gatekeeper, a guardian of financial prudence amid unfolding opportunities.

Judy Rinkus, CEO & founder at Seed To Sale Funding, cut through the optimism with her sobering intervention. Regulatory easing doesn’t translate to an avalanche of bank loans. "High-risk," a tag, an inscription almost, promises to linger, keeping the industry's aspirations tethered.

An intriguing twist in the narrative is the intersection with cryptocurrency. Colin Bass introduces this unlikely alliance. Here, platforms like Salt Lending emerge as potential saviors for the smaller cannabis entities, a sanctuary where traditional banking fears to tread.

"If you're a good operator and you can prove that… you should be able to get funding," said Villapiano. Operational excellence is not just a virtue but a necessity, a ticket to the elite club of funding recipients.

Taxation, that complex behemoth, looms large in Hennessy's discourse. A consistent loan process exists, yet the shadow of the "tax issue" lurks, a variable that can make or break the financial aspirations of cannabis entities.

Rinkus's advice for companies is both a lifeline and a wake-up call – prepare, adapt, and overcapitalize. In a terrain where predictability is a luxury, her words are a lighthouse amidst tumultuous financial seas.

The sentiments of Bass’s “good luck” encapsulate a shared realization – navigating the current strict lending environment is akin to a challenging journey riddled with obstacles. Each application for funding emerges as a gauntlet, a rigorous examination of the applicant's readiness and financial resilience.

Villapiano and Hennessy converge on a universal truth – communication is king. In the intricate dance of refinancing and impending maturity dates, preparation and ongoing dialogue are not just strategies but lifelines.

Photo from Benzinga conference