The new wave of cannabis talent? A company’s strategy to support corporate MSOs

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The following post was written and / or published as part of a collaboration between Benzinga’s internal sponsored content team and a Benzinga financial partner.

Data from FinCEN’s quarterly marijuana bank updates showed that just 684 banks and credit unions serve the majority of the $ 20 billion cannabis industry.

Many cannabis companies such as Tin and Sundial Growers Inc. (NASDAQ: SNDL) and other single state or regional dispensaries and producers are just starting out or fall into the small and medium categories.

But are there banking solutions with the structure and resources to support large enterprises and multi-state operators (MSOs) like Curaleaf Holdings Inc. (NASDAQ: CURLF), Tilray Inc. (NASDAQ: TLRY) and Cresco Labs Inc. (NASDAQ: CRLBF)? There is at least one.

Banking, payments and treasury

Abaca is an example of a cannabis banking and finance platform that seeks to provide leading treasury and cash management solutions to established elite cannabis companies.

While Abaca offers affordable banking options for small businesses, the company also prides itself on being one of the few providers that allows financial operations for corporate MSOs.

“We don’t see a lot of companies doing what we do for large MSOs. At Abaca, we believe the cannabis industry is not unbanked – it is underbanked“said Dan Roda, CEO of Abaca,” and it’s not maintenance free, it’s underserved. ”

It’s a bit of a myth that a large portion of cannabis businesses still operate primarily in cash. But for those who prefer to do it, Abaca says he’s got them covered.

With Abaca’s cash management services, businesses benefit from a 24/7 available cash balance, as well as access to industry-leading safes and cash recyclers. In addition, Abaca works strictly with controlled, insured and bonded logistics providers, offering armored transport and door-to-door depot services. All this with the aim of reducing cash management time for its clients by up to 80%.

However, some retail studies have shown that over 50% of consumers prefer to pay cashless.

In a recent meta-analysis conducted by Abaca, the company reported that paying with plastic tends to increase revenue by more than 8%. The study took data from nearly 15,000 transactions carried out over a period of one month in June 2020. For its customers who have made the switch to digital, the company offers Abaca Pay.

With Abaca Pay, customers can perform debit transactions in-store, curbside, and during delivery. This reduces cash handling by up to 40%. The system sets up in a week with personalized assistance from a dedicated representative.

The new Abaca treasure center

Abaca began operations in 2017 and, in August 2021, reached the $ 1 billion mark in compliant cannabis transactions and is already approaching the $ 2 billion mark. As the company reflected on its first 4 years in business, Roda offered some advice.

“Cannabis companies face unique challenges when it comes to accessing FDIC-backed Federal Deposit Insurance Corp. banking services, accessible loans, and reliable payment processing. There is no one-size-fits-all solution. As the industry matures, the financial solutions available to the industry will also evolve. “

Roda continued with a personal example of the Abaca trip so far.

“When we started out, a major focus was on solving cannabis deposit banking issues in the markets. Now we are working on a full platform called Abaca Treasury Center which allows medical marijuana operators to view all accounts in one easy to use dashboard, manage accounts receivable more efficiently, pay with Automated Clearing House (ACH) / electronic payments, manage multi-user access, view real-time cash flow and more. “

Abaca Treasury Center seeks to streamline the banking and financial management of cannabis for MSOs by integrating seamlessly with pre-existing tools, consolidating financial operations for full visibility and control, and offering FDIC-insured commercial bank accounts .

Loan options and conditions

Abaca found that for many businesses, cash flow-based loans are simply not enough. Thus, Abaca claims to help its customers to take advantage of its assets in order to develop its activity more quickly by offering two types of loans: term and conventional.

Term loans offered are between $ 50,000 and $ 250,000. Businesses can qualify within 24-48 hours and the availability of funding is on average two business days. Term loans are available nationwide for operators with 6 months of proven cash flow and at least 3 months of banking history.

Conventional loans between $ 250,000 and $ 5 million are also available and are typically funded in 4-8 weeks. These loans are available to new and existing operators with durable assets (real estate, equipment, etc.) as collateral and at least 3 months of banking history. Personal guarantees are generally required.

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The foregoing post was written and / or published as part of a collaboration between Benzinga’s internal sponsored content team and a Benzinga financial partner. While the article is not and should not be construed as editorial content, the Sponsored Content team works to ensure that all information contained in it is true and accurate to the best of their knowledge and ability. research. This content is for informational purposes only and is not intended to be investment advice.

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