August 2018

B¬G H¬TS A State-chartered community banks and credit unions are presently most likely to be serving the cannabis indus- try. We have not seen the regional banks or national banks “openly” serving cannabis businesses. There also is a distinction between “plant-touching” cannabis businesses and ancillary businesses that provide goods or services to cannabis businesses. Some ancillary busi- nesses have been successful getting accounts at major regional or national banks, but it depends greatly on the personal relationship between the owner of the ancil- lary business and the branch manager of the bank. Q What types of banking fees should a firm expect to pay? A This is a supply-and-demand question and varies greatly between states. In some states, we’ve seen application fees of several thousand dollars, followed by monthly fees of several thousand dollars. In other states, we’ve seen application and monthly fees as low as several hundred dollars each. Q What is the biggest mistake a company can make to jeopardize its banking relationship? A Always respond promptly to all requests made by your banker and never “surprise” your banker. Withholding negative information from your banker is a sure way to get your account closed. If there is an issue, like you’ve received a Notice of Violation from a state inspector, don’t hide it. Get out in front of it and have a plan in place to correct the violation. Be able to demonstrate where every dollar received by the cannabis business has come from. This applies not only to money that you’ve deposited into your account but to cash that may be held on hand to pay for inventory. If you cannot prove, with documentary evidence, where every dollar has come from, it will surely make your banker nervous. Q What steps should a firm take if its banking relationship is cut off? A A lot depends on why your account was closed. If it was closed because the bank simply decided to no longer provide services to cannabis businesses in gen- eral, then ask the bank for a letter to that effect so you can show it to your new prospective bank. If your account was closed because of something your business did or failed to do, then you are in a much more difficult situation. Be prepared to demon- strate that: • You have fixed the issues that caused your account to be closed. • You have put measures in place to ensure those same issues do not arise in the future. Other than the added cost, there’s no risk to having accounts open at two financial institutions at the same time. That way, if one account gets closed, you have a backup. ◆ This interview has been edited for length and clarity. Canadian Cannabis Companies Ink Stock-Purchase Deals Totaling $250 Million Two marijuana companies in Canada are set to expand with capital raised through stock-purchase deals that together totaled $250 million (CA$325 million): • Ontario-based producer Aphria plans to expand its production capacity in Canada and in foreign mar- kets through a $173 million (CA$225 million) stock- purchase deal. • Vancouver-based Cannabis Wheaton Income plans to hunt for investment opportunities in Canada and internationally thanks to a stock-purchase deal val- ued at $77 million (CA$100 million). Phyto Partners Raises $14 Million for Second Fund Phyto Partners, a cannabis-focused venture capital fund in Boca Raton, Florida, has closed its second fund, raising $14 million from a group of limited partners. BDS Analytics Raises $3.5 Million BDS Analytics plans to expand its sales-tracking software nationally and hire more staff, thanks to a $3.5 million funding round. The company in Boulder, Colorado, provides cannabis industry data based on point-of-sale information it gathers from retailers. The raise capped off a Series B funding effort led by a $750,000 investment by Canopy Ventures I, also based in Boulder. Number of Note: $80 Billion The U.S cannabis industry could pump nearly $80 bil- lion into the nation’s economy by 2022, a notable figure that highlights the true reach of the marijuana industry. Estimates published in the newly released Marijuana Busi- ness Factbook show the total economic impact of legal marijuana sales increasing from $20 billion-$23 billion in 2017 to $63 billion-$77 billion by 2022 – a 223% increase. 13 • Marijuana Business Magazine • August 2018