Raising Cannabis Capital 0085: Cannabis Business Funding - Investor

Getting a small business loan is very difficult for start-ups in all industries but it is especially difficult for start-ups in the cannabis industry.  Most banks are restricted from working with cannabis companies for fear of violating federal laws so getting a cannabis business loan from bank is impossible.   On this episode Larry Issacson from Cannabis Business Funding tells Dan Humiston how his company works with insurance companies to help cannabis business not only get loans but also help them get checking accounts.

Produced By MJBulls Media

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Dan Humiston:
Today Show and the following message are brought to you by Trevett Hill cannabis investors expect big returns from the companies that they invest in. Unfortunately not all cannabis investments succeed. Trevett Hill's management team works with investors to help turnaround or in some cases purchased their underperforming portfolio companies to learn more. Go to Trevett Hill dot com.

Larry Isaacson:
When you get debt you what you're really getting is that you're renting the money because the period you're using it just as if you took an apartment or a front. At the time he is a renter.

Dan Humiston:
From Buminit media. It's the MJBullss podcast a show about Raising Cannabis Capital.

Dan Humiston:
I'm Dan Humiston. And on today's show how more and more cannabis companies are borrowing money instead of selling equity to fund their growth.

Dan Humiston:
Today the cannabis investor spotlight is shining on Larry Isaacson who's the senior loan officer at ripe funding. Larry welcome to the MJBulls Podcast. Thank you very much.

Larry Isaacson:
Dan you know in the past getting a business loan for a cannabis business was impossible. Most of my listeners understand the challenges cannabis businesses face with banking. I mean just getting a bank account is difficult but forget about getting a loan from a bank. And even if they change the banking laws it's still going to be highly unlikely that cannabis startups will be able to get loans from banks because banks just don't give out StartUp loans unless they're backed by the SBA Small Business Administration which is a federal government programs that in cannabis you know it's still federally illegal. It's just not going to happen. So recently we've seen a lot of nonbank companies entering the cannabis space and providing loans for cannabis companies. Larry why do cannabis companies are starting to choose this form of funding as opposed to seeking equity investments.

Larry Isaacson:
Well if they look at it properly they think that equity is better and quicker. However in the long run when you borrow money it's actually cheaper because what you're doing is paying for the money for the time that you have it when you get debt you what you're really getting is that you're renting the money for the period you're using it just as if you took out an apartment or a storefront. But the time is they rent done it yeah.

Dan Humiston:
It's a good way to put it is you're really just renting the money so that you can plug a gap or use it to grow your company. Now loans for businesses professionally startups a lot of it's not for equipment some of it's for marketing some of it's to hire personnel. That's not really important when it comes to the loan is what you're using it for isn't is important.

Larry Isaacson:
It depends on the circumstances. Yes in most cases it is you know they do want to know what you're using the money for but a lot of the times as you just explained it's for soft costs which are necessary and fruit hemp if you're during a startup and you need to buy equipment where the equipment has value and depending on circumstances you can get X percent of loan to value on a piece of equipment. So that's a different type of situation. The fact that during the cannabis you then have to find the right lenders that will lend to you in that space. And it's not your local bank.

Dan Humiston:
No it never is. No. So the companies that you work with to help cannabis companies secure loans. What type of companies are those.

Larry Isaacson:
There are direct lenders and also a direct lender. So you know it's a matter of looking at the application and the borrower and the circumstances surrounding it to decide where where's the best avenue to get them funded. Everybody has. Everybody has a little niche that they like and you have to sort of fit all the pieces into the niche.

Dan Humiston:
You mean every every lender has a certain niche that they like. Is that what you mean. Correct. Correct. Yes. And a lot of startups have most of their capital tied up in their business and they don't have a lot of traditional assets like in their business and like real estate. A lot of them don't have stock portfolios. I mean you dispensaries they're not going to have a lot of equipment. But there is a lot of non-traditional assets that entrepreneurs possess and a lot of times don't even realize they possess which can be used to collateralized alone. Maybe you can give them some examples of those.

Larry Isaacson:
Assets are not necessarily always tangible assets can be non tangible. For example if you happen to come up with a formula and you have a patent on that a little well you have give an asset in that part that has value.

Dan Humiston:
Others add that a dispensary license has value. Grow license has value. If people owe you money and you have accounts receivable has a value crossover purchase order. Great example. And so a lot of times business owners don't look to those because they're saying to you know I don't have any real estate so I don't have anything to collateralized but you would do you just need to think about it all from a different set of lenses. So is there any other type of assets that entrepreneurs may possess.

Larry Isaacson:
Absolutely. We have a very unique program. It's a customized stock loan program and there are a lot of people who aren't don't even realize it that they have stock in their brokerage account. We look at any kind of electronic on any stock exchange in the world. We put that into a matrix that we have and that algorithm then comes up and gives us an indication of how much we can lend.

Dan Humiston:
I'm really excited to let all of our listeners know about a brand new podcast that MJBulls Media is launching on Sunday March 17th Hemp Barons is a weekly show that features the hemp companies and products that are using this amazing plant to change the world.

Dan Humiston:
Please check out Hemp Barons on Sunday March 17th on iTunes sketch your Spotify or wherever you get your podcast from one other service that you provide that I wanted to touch on is that you also provide banking where access to bank going to merchants direct clearness the an overview as to how this works because that's another thing that's in real big demand especially for the cash businesses.

Larry Isaacson:
Correct. Yeah. Well what we do is we work actually with an insurance company and what we do is we have if someone is interested they go to one of our offices or one of our two main offices one in Las Vegas and the other one in Orange County. And they go for it. And when they interview they take when they are accepted they make a deposit into their accounts. That money is frozen for two weeks and then after two weeks it's released and then they can go to a banking institution that we work with all around the country. Then they can make deposits and they can deposit cash. That's probably one of the biggest drawbacks right now is a lot of people in this business have large large quantities of cash. The more is that it doesn't show up on your bank statement. So if we're analyzing what your business does we're not seeing the full picture.

Dan Humiston:
Ok. Again that's a great service and a service it's in high demand for people. If people are interested in learning more what should they do.

Larry Isaacson:
They can email me at Larry and.

Dan Humiston:
I'll also have a of Larry's information on the M.J. MJBulls Web site. Larry thanks for being a guest on the MJBulls Podcast today. Very informative.

Larry Isaacson:
My pleasure. It's been a pleasure and there's you know I'm looking for it any way that I can help this grow in business. No pun intended. Well good luck.

Dan Humiston:
Just a quick reminder that you can become an MJBull member for just four dollars and ninety nine cents per month and enjoy exclusive access to companies pitch decks and the MJBulls cannabis capital directory. Join today at MJBulls.com.

Dan Humiston:
Thanks for listening to the MJBulls Podcast. To learn more about today's guests or to become a guest. Visit our Web site at MJBulls.com. Today's show is produced by Buminit media with original music composed by Jamie Humiston.

I'm Dan Humiston and you've been listening to the MJBulls Podcast.

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