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Large Us Cannabis Companies Look To Debt Funding Versus Equity And Sale-leaseback Deals

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Large US cannabis companies look to debt funding versus equity and sale-leaseback deals

Published 2 hours ago | By Nick Thomas

Big marijuana companies in the United States increasingly are turning to debt as a funding tool, spurred by falling cannabis stock prices and terms that are more attractive than those for real estate sale-leaseback deals.

Multistate operators Curaleaf, headquartered in Massachusetts, and Cresco Labs, based in Chicago, have led the way by announcing debt raises of up to $300 million and $200 million, respectively, in recent weeks.

New York-based Acreage Holdings joined the bandwagon last Friday, announcing it secured up to $100 million through a credit facility with an unnamed institutional lender.

Acreage CEO Kevin Murphy said in a news release the debt funding comes at “a time of limited capital availability for our industry.”

He noted his company had “cemented a relationship with a well-capitalized institutional lender that has the capacity to provide additional credit facilities as necessary.” Such deals might be a sign of things to come, said Jeff Schultz, a partner at cannabis-focused investment bank Navy Capital in New York.

For starters, falling cannabis stock prices have made equity a less attractive source of funding for marijuana companies.

At the same time, large cannabis companies increasingly have been selling their cultivation, processing and storage facilities and immediately leasing them back as a way to instantly raise tens of millions of dollars.

Source: https://mjbizdaily.com/cannabis-companies-looking-increasingly-at-debt-solutions-amid-capital-constraints/

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