Marijuana MSO Curaleaf raises record $425 million from 8% debt financing

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Marijuana multistate operator Curaleaf Holdings said it has received commitments for a privately placed debt raise of $425 million – the largest yet for a U.S. cannabis company – while securing an interest cost that is among the lowest in the industry.

The five-year senior secured notes have an 8% annual interest rate, according to a news release issued Monday by the Massachusetts-based company.

The agreement also permits up to an additional $200 million of senior bank financing.

The deal is the biggest example yet of a shift from equity to debt financing, with large MSOs enjoying some of the lowest interest rates in U.S. cannabis industry history, thanks to stronger balance sheets and expanding marijuana markets.

St. Louis-based investment firm Stifel GMP wrote that Curaleaf’s debt cost “is equivalent to the lowest the industry has seen to date.”

In October, Florida-based Trulieve Cannabis netted $350 million in proceeds in a debt raise that also had an annual interest rate of 8%.

By contrast, large MSOs were paying annual interest rates of 11% to as high as 20% on debt in 2019, according to Stifel.

Curaleaf and Trulieve – the latter acquired Arizona-based Harvest Health & Recreation earlier this year – are the two biggest cannabis companies in the U.S. based on revenue.

Eleven cannabis debt financings exceeding $100 million each have closed since December 2020, New York-based Viridian Capital Advisors noted in a research report this week.

“Larger transactions are becoming more popular because they cater to the institutional investors entering the market looking for more liquidity,” Viridian wrote.

But Viridian noted a wide debt cost spread between large MSOs and smaller plant-touching operators.

Denver-based Schwazze, for example, is paying a 13% annual interest rate on a $95 million raise that recently closed.

“The difference between the Curaleaf and the Schwazze deals demonstrates that the cannabis debt market has not fully matured,” Viridian wrote.

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The firm said it expects that gap to narrow as the small operators show stronger financials and “solid business strategies.”

In terms of the Curaleaf raise, Stifel wrote: “We see the favorable terms as fruits of the company’s expansive footprint with the only MSO having a national presence, an attractive exposure to three recreational market conversions in the tri-state area (New York, New Jersey, Connecticut)” and expansion into international markets.

The debt financing is expected to close Dec. 15, with proceeds to be used for refinancing and working capital.

Stifel wrote that Curaleaf could save roughly $20 million annually by paying off a $300 million, 13% loan that closed in January 2020.

Seaport Global Securities and Canaccord Genuity acted as placement agents in the U.S. and Canada for Curaleaf’s new debt financing.

Curaleaf trades as CURA on the Canadian Securities Exchange and as CURLF on U.S. over-the-counter markets.

Jeff Smith can be reached at