For cannabis businesses, maintaining adequate working capital while attempting to operate and expand remains a constant concern for the industry. While many have turned to public markets in the past as a means of funding, cannabis businesses are finding that public markets aren’t as accommodating as they were just a year ago, and public and private investors alike are demanding lower valuations and therefore larger percentages of the companies they invest in, and in many cases access to capital has dried up completely.
Pharm Capital has stepped in with credit solutions for cannabis businesses that don’t want to trade percentages of ownership for day to day working capital and need access to capital fast. What qualifications are needed for Pharm Capital to provide credit to your business? Revenue and a bank account. Period. This opens up a large percentage of the cannabis industry to an available solution for their working capital crunch.
What Pharm Capital provides is an unsecured working capital and bridge financing instrument for companies seeking access to short term credit. Colin Conway, the Managing Partner of Pharm Capital, explains, “ With close to zero available credit in the market, we’ve created a credit instrument which allows for companies to gain access to capital without having to go through a lengthy and often unsuccessful underwriting process and get the capital they need to operate. I’ve seen so many operators spend months fundraising and come up empty handed, meanwhile their business suffers.” Pharm Capital can provide $250,000 to $5,000,000 in funding in less than a week. Of course, for virtually all banks and lenders, cannabis business is a nonstarter, due to the unjust and hypocritical federal Schedule 1 status still being applied to the plant.
If one were to consider raising equity for short term needs, the underwriting process is much too lengthy and involved for most business operators seeking to keep up in a highly active and competitive market. As Conway explains, when companies try to take the equity route for funding, “It generally takes 60-90 days to get a deal done, maybe longer. And a lot of these companies, they don’t have time to wait that long.” The bottom line remains, though, that even when successfully submitting to the lengthy and arduous process, raising equity is a process that takes the attention away from management’s focus on operating and growing a successful business.
So what are the options for a cannabis business looking for a way to grow and create market share? Of course, one needs to find ways to get capitalized in order to meet customer demand, which means access to capital. For many cannabis businesses, that boils down to private money or public equity – which means giving up part of your ownership of the brand or idea you’ve grown or incubated – or there’s credit. Pharm Capital is one of the very few companies offering non-dilutive capital, allowing entrepreneurs, agricultural operators and creators a solution for immediately sustaining and growing their business, without giving up any ownership. Companies that can display their viability via revenues and financial history can now have a quicker and easier solution to the barriers in accessing cannabis capital.
