Debt Financing Is on the Rise
With cannabis stock prices stalling and sliding over the past few years, companies increasingly have turned to debt financing as a means of raising funds. Last year, debt made up more than 90 percent of capital raised by American cultivation and retail companies and 55.7 percent of capital raised in the United States industry overall, according to data collected by strategic advisory firm Viridian Capital Advisors . In October 2022, multistate operator (MSO) TerrAscend Corp. secured a $45.5-million loan from real estate lender Pelorus Equity Group to help fund its New Jersey and Maryland operations. The loan, which matures over five years, began with a variable annual interest rate of 12.77 percent but is based on a variable rate tied to the one-month secured overnight financing rate, with interest-only payments for the first thirty-six months. While MSOs like TerrAscend have access to this type of loan thanks to significant cash flow and equity, it’s more difficult for small and med...