Understanding Cannabis Funding and Accessing Capital with Adam Stettner

“I am a finance guy. I love math, and I love problem solving. My goal is to listen and learn, study an industry, and then try to design products that fits whatever pain or gap I am being told exists. My job is not to tell someone what to do or how to run their business. My job is to provide the money they need to achieve their goals or objectives.” – Adam Stettner

The finer details of this episode:

• Challenges faced by small businesses in accessing capital
• Underbanked nature of the cannabis industry
• Role of alternative lenders in providing capital to businesses
• Factors to consider when seeking capital
• Time constraints in obtaining funding
• Capital needs of businesses in the cannabis industry
• Aligning financing options with unique revenue cycles
• Right-sizing funding based on business needs
• Potential impact of cannabis rescheduling and tax regulations

Episode resources:

• Book a free consultation with Guillermo: https://anderscpa.com/virtual-cfo-cannabis/
• If you’d like to be a guest on the show: cannabizsuccessshow@anderscpa.com
• Love our content? Sign up for our newsletter: https://www.summitcpa.net/summit-cannabis-newsletter
• Connect with Adam Stettner here: https://www.linkedin.com/in/adamstettner/
• Check out FundCanna here: https://fundcanna.com/

Timestamps:

Introduction (00:00:00)

Introduction to the Cannabis Success Show and its focus on helping cannabis company owners scale their businesses and access expert insights.

Accessing Capital for Small Businesses (00:00:25)

Discussion on the need for small businesses, including cannabis companies, to access capital and the reasons behind it.

Adam Stettner's Background and Transition to Cannabis (00:01:13)

Adam Stettner's background in finance and lending, and his transition to focusing on providing capital to the cannabis industry.

Cannabis Industry's Underbanked Status (00:02:44)

Insights into the underbanked status of the cannabis industry and the need to unlock capital for cannabis businesses.

Impact of the Pandemic on Cannabis Industry (00:04:18)

The impact of the pandemic on the cannabis industry and the increase in demand for capital during that time.

Challenges Faced by Small Businesses in Accessing Capital (00:05:56)

Discussion on the challenges faced by small businesses, including cannabis companies, in accessing capital from traditional banks.

Role of Private Lenders in Cannabis Industry (00:08:48)

Insights into the role of private lenders, such as Fund Canada, in providing capital to the cannabis industry and bridging the gap left by traditional banks.

Credit Underwriting Process and Business Owner's Preparation (00:12:36)

Insights into the credit underwriting process and how business owners can prepare to increase their chances of obtaining funding.

Role of Bridge Funding for Larger Companies (00:20:43)

The role of bridge funding for larger companies in leveraging private lenders to meet immediate capital needs while waiting for traditional bank funding.

Managing Capital Needs for Cannabis Businesses (00:22:21)

Insights into managing capital needs for cannabis businesses based on their specific cycles and revenue events.

Understanding Revenue Cycle and Financing Options (00:25:15)

Discussion on the mismatch between vendor terms and revenue cycle, and the design of financing options to fit the supply chain.

Challenges of Retail and Cultivation Integration (00:25:54)

Exploring the different skill sets and capital needs of retail and cultivation businesses, and the need for understanding the revenue cycle.

Borrowing and Financial Understanding (00:26:49)

The importance of understanding the capital needs and revenue cycle, and the role of a debt provider in providing funding.

Vertical Integration and Financing Dynamics (00:27:34)

The revolving nature of financing for vertically integrated operators and the usage timelines for different types of businesses in the supply chain.

Cash Outlay and Borrowing Cycles (00:29:04)

Discussion on the cash outlay requirements for opening new stores, building out inventory, and the borrowing cycles for different business needs.

Managing Borrowing Needs (00:30:55)

The importance of starting small and right-sizing borrowing needs based on a relationship-based funding approach.

Financial Metrics and Borrower Evaluation (00:32:38)

Evaluation of borrowers based on inflow and outflow of money, and the significance of cash flow over credit scores in lending decisions.

Bank Statements and Financial Evaluation (00:36:55)

The importance of bank statements in evaluating the inflow and outflow of money for determining serviceability and lending decisions.

Impact of Rescheduling and Taxation (00:40:26)

Discussion on the potential impact of rescheduling and amended returns on the industry's cash flow and taxation burdens.

Industry Conferences and Contact Information (00:49:26)

Upcoming industry conferences and the availability of Fund Canada online for further information and communication.

Adam Stettner's Insights (00:50:36)

Adam encourages exploration and learning, emphasizes the value of diligence, and offers free conversations.

Building Relationships at Conferences (00:50:59)

Guillermo recommends attending conferences to build relationships and emphasizes the value of in-person interactions.

Helping Businesses Find Success (00:51:39)

Guillermo emphasizes the podcast's mission to help businesses succeed, especially in navigating capital challenges and cash crunches.

Promotion of Podcast and Website (00:52:20)

The host promotes the podcast and website for additional tips and strategies in the cannabis industry.