Multistate marijuana operator Acreage Holdings said it raised $33 million in debt, a development that shows an easing of a credit crunch facing the company.
The three-year loan with an unidentified institutional lender is unsecured and at a 7.5% annual interest rate, the New York-based company said in a news release.
By comparison, Acreage, which has been withdrawing from some markets, selling assets and refocusing operations, scrambled to raise $15 million in June through a four-month bridge loan at an exorbitant 60% annual interest rate.
The $15 million loan was secured by Acreage operations in Illinois, New Jersey and Florida as well as intellectual property, according to a regulatory filing.
“Access to low-cost capital, even in a very challenging capital market environment for cannabis, has always been a core part of our strategy,” Bill Van Faasen, interim CEO, said in Tuesday’s release. He said the cash infusion strengthens the company’s balance sheet.
Acreage said part of the proceeds from the $33 million raise will be used to retire a short-term $11 million convertible note that was signed on May 29 and carried a 15% interest rate, according to regulatory filings. That note was secured by the company’s medical cannabis dispensaries in Connecticut.
Howard Schacter, Acreage’s vice president of communications, told Marijuana Business Daily on Wednesday that the company has options for the additional proceeds and anticipates “making an announcement in the coming weeks” with respect to the $15 million, 60% interest loan.
Shortly after the $15 million loan was announced, Acreage closed on a deal to acquire a vertically integrated medical cannabis operation in New Jersey, Compassionate Care Foundation, for $10 million plus the assumption of debt.
That deal gave Acreage a foothold in a market poised for potential adult-use legalization.
As part of its refocus, Acreage has pulled out of the North Dakota and Iowa medical marijuana markets this year and put other assets up for sale.