April 19, 2018
Partner Amanda Balasubramanian has spoken with Marijuana Business Daily about debt financing in the fast-growing cannabis industry.
The article talks about how “capital-hungry cannabis companies” are looking at debt financing as a funding alternative as the industry continues to establish itself with lenders.
An excerpt of the article is below:
Regulatory issues can be obstacles to securing loans for smaller firms, said Amanda Balasubramanian, a partner with Torys and co-author of the report, “Debt Financing Strategies for Tomorrow’s Cannabis Industry.”
For example, Health Canada will grant a growing license only to one licensee and one address – making the permit nontransferable to another location. As a result, it doesn’t make good collateral.
In addition, all directors and officers of a licensed producer, as well as senior staff in charge, must have security clearances from the Royal Canadian Mounted Police.
A lender who does not have this clearance has no ability to obtain the firm’s license in the event the borrower is unable to meet its financial obligations.
Another issue that troubles some lenders is the lack of regulatory guidance on what transpires when the borrower becomes insolvent, according to Balasubramanian.
You can read “Debt Financing Strategies for Tomorrow’s Cannabis Industry” on the Torys website.
Torys has written extensively on cannabis, which you can view on the dedicated cannabis trends page.