5/14/2021 - One Of The Pot Industry's Best Highs Is Fading

posted by SOJE Fund, L.P.
4w ago 161

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Top U.S. cannabis growers will be glad to see the back of one particular high: double-digit interest rates. Others in the pot industry may feel a bit deflated.

Green Thumb Industries, which this week reported 90% comparable sales growth in the first quarter, recently secured the first debt deal by a big listed U.S. marijuana cultivator at a sub-10% coupon. The Illinois-based business got a three-year loan at a 7% interest rate, or 9.1% factoring in warrants, based on calculations by Viridian Capital Advisors. Rival Curaleaf got a credit facility at 10.25% without an equity sweetener earlier this year.

U.S. growers will be treated as pariahs by mainstream banks so long as the drug remains federally outlawed. Yet their cost of capital is coming down anyway, as business booms and competition among yield-hungry alternative lenders heats up.

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