Euwana Capital – Don Hirsch
Euwana Capital – Don Hirsch
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Don Hirsch: [00:00:23] to start what so we're looking for bigger projects. Which is good because it usually brings in a little more sophisticated tech personal thinking big who needs large project financing our million two hundred million dollars.
Dan Humiston: [00:00:44] From MJBulls Media it's the raising cannabis capital show.
Dan Humiston: [00:00:52] I'm Dan Humiston and on today's show how this lifelong entrepreneur is providing big dollar financing to fund the new wave of giant cannabis projects.
Dan Humiston: [00:01:09] Today in the cannabis investor spotlight is shining on Don Hirsch the CEO of Euwana Capital a company that lends money to cannabis businesses Don. Welcome to the MJ bulls podcast.
Don Hirsch: [00:01:19] Oh thanks for having me.
Dan Humiston: [00:01:21] Well for full disclosure Don and I we've known each other what over 20 years. And we did it. We've done a bunch of deals together including the cannabis World Congress Business Expo. We started that back in 2014 are you happy I got you the cannabis industry.
Don Hirsch: [00:01:38] Still remember the day you called me up and said that you had an idea for this. We ought to get in the cannabis industry. And I thought for about a half a second I said You're right. I'm. And since then it changed our life projection.
Dan Humiston: [00:01:53] Holy cow you're right you can say that again. I mean everybody Dan and I both in the indoor tanning industry Dan is from Chicago and he had one year's largest tanning salon chain in the Midwest and I was in Buffalo. And so our chains were in different regions so give us a chance to work together we have to worry about competition concerns. I mean there is a point where we were pretty close we had a whole group of people we're rolling up the industry. It would have been really a cool deal if we could have pulled it off.
Don Hirsch: [00:02:21] Yeah I think those are a great time to start getting together knowing that you and I other people in the industry and working together looking at different big pictures of what else we could do. And that was a great learning experience for us. And I think going through that process yeah.
Dan Humiston: [00:02:34] We were like I think we're like three years too late because right we're about with the time when it would have worked is about the same time that the indoor tanning industry sort of started to take it like it was like we had it all. Everything was in place it. We just the industry just let us down. So let's fast forward. We're both in the cannabis industry now in about two years ago you started. euwana capital. Tell us what you saw in the industry why this opportunity jumped out at you.
Don Hirsch: [00:03:01] Good for you and I sat down with the CWCbExpo meeting people at the shows and walking around the shelves and talking to people. Are the biggest things that people always talk about was money. I mean I was always looking for money looking to expand looking to do more. There's so much opportunity and you need money for all that as everything else is where the banking system is the United States. That's basically impossible. You can't get a loan for a long time of childhood friend of mine who happens to be loaning money in other businesses as we're just talking as well still still he asked people on the campus doesn't need money and I said Absolutely. So I you started dabbling with some work to see if I get a couple leads here and there and eventually I just got flooded with business opportunities people calling me to say loan money cetera basically just dropped everything else I was doing and just went full time in to the loan business basically you know banks are loaning money and we had a few companies that have been on the show that are lent lending money so it's starting to happen but no one lends at the level that you lend at.
Dan Humiston: [00:04:01] You've carved this niche out and you own it. It's big dollars to our listeners.
Don Hirsch: [00:04:06] What are your thresholds are we have a 10 million dollar minimum our long start at 10 million. We've virtually no cash. What do we do the cannabis industry because somebody just comes from a private investment group it doesn't come from it. Banks were able to loan money in that we loaned money in other businesses. So I have other projects outside the canvas industry that we loan money and we did our minimum to start what. So we're looking for bigger projects which is good because it usually brings in a little more sophisticated type of personal thinking bag who needs large project financing. Hundred million to one million dollars. The other advantage of being in this space is I must look at 50 deals a week that people suddenly meet their debts. See that's out there. So my knowledge of the industry. I keep seeing all these things. It grows exponentially. It's great that you go to the trade shows that you know there's a lot of other sometimes capital people there. But since what the 10 million dollar minimum. And the other thing that is unique about our business is we don't take equity when the trade shows come back. I was a unicorn. I told people like you don't exist. Said what you mean. I was told in the cannabis industry you can't get a loan the only way to get money is to give it back. And he says you're virtually the only company I found out here that's willing to give us money and not take equity. And we like that because we deal with a lot of different businesses in the same industry and same sectors. So we don't have a financial interest in one or the other so we could finance two competing companies with us that's fine.
Don Hirsch: [00:05:33] We don't have a financial interest in either one slowly money. We wish them both successful we want them to succeed obviously because we want to get paid back.
Dan Humiston: [00:05:46] Just a quick reminder that you can view each of the company's confidential pitch decks including how much they're raising and the terms of their deals and the MJBulls website. Go to MJBulls.com to find the cannabis investment opportunity that's right for you.
Don Hirsch: [00:06:03] But it's not uncommon in other industries it just this industry in most industries especially he's not a startup so you get an SBA loan from the government and that's how you start it and you pay back the loan. This industry is unique just because there's no banking. And I think you're unique because the dollar amount that you guys offer. It's more for a sophisticated business. It's somebody that's a startup that's you know they're not going to say hey I got this idea I think I'm going to borrow 10 million dollars. I mean you don't waste your time on a lot of those type of deals. You preselect the type of customers that are going to be applying. So that's how to make your life a lot easier.
Don Hirsch: [00:06:39] Yeah it does. And the other thing about us is we do 100 percent project financing. Banks will do 60 70 percent LTV projects. This one my client said they give me just enough money to fail. Our philosophy is different. It is the deal 100 percent project financing which means to cover a small cost to cover the working capital. If you walk through those steps initially we are under collateralized even at 10 million dollar projects. If they need 2 million of working capital is 8 million dollars in assets in the deal. If the deal goes bankrupt way before to me and hours of working capital you know collect. But our philosophy is if you give somebody 70 percent of the money they need and they never finish it. You have 70 percent of the building last door and the whole project is worth nothing. So our goal is to make sure the project gets up and running it is revenue generating so they can even include some people include the first payments to us in the working capital they need. Our goal is to get them revenue generating so they can pay us back. So we do 100 percent project financing. We think it's a safer deal than doing 60 70 percent LTV loan to value the project. So it's another advantage we have. We think get financing deals. People love it. They put less than money out and they feel more confident that their project is going to get completely done.
Dan Humiston: [00:07:56] Yeah and there's two other points that you really haven't touched on one of them is your interest rates are fairly low really low and you don't require a ton of collateral on these deals either.
Don Hirsch: [00:08:07] Right. The collateral we need is how we determine if we're going to do a deal in the future the future value of the assets once the deal is completed. So if you're going to tell me you're building a cultivation center at three dispensaries we know that if it costs you 15 million dollars this project we just get up in Massachusetts. We offer possibly financial 50 million dollars. We know the day after that project is done and the operating cultivation center to be dispensaries that that project we could sell for 20 30 million. That's what we do on some project financing because we're really over colorized. What's a project to start. We're under Bill Clinton I start was overpriced when the project is done. We have some very simple payback terms as simple principle and interest. We are currently holding at a three point seventy five percent fixed rate which is fixed for 15 years. It's a 20 year Emerald nation which also helps a client because you obviously got a smaller monthly payment on a 20 year it gives you more cash flow gives you a balloon payment at the end of 15 years but most people think 50 years to be out of the business by then because we take a corporate guarantee we don't require any personal guarantees.
Don Hirsch: [00:09:16] And with us there's no prepayment penalty somebody comes along Great a big check buys them out they could turn around and pay off our loan to us with no prepayment penalties any time they want. We don't take options we don't take warrants we don't take equity in the deals what we do.
Dan Humiston: [00:09:30] Well I mean it is pretty much straightforward again but it's a bigger project. So if there are people out there right now that are in this market that this makes sense for you want a capital. I have Dan's information on our website right now. You go to MJBulls Web site to get all Euwana capitals contact information reach out to them directly. Don it's exciting stuff. I'm sure we'll be working on another project someday. But I wish you the best on this.
Don Hirsch: [00:09:58] Thank you very much.
Dan Humiston: [00:10:03] Thanks for listening to raising Canada's capital 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 MJBulls Media with original music produced by Jamie Humiston. I'm Dan Humiston and you've been listening to the raising cannabis capital podcast.
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