Marijuana stocks rode highs from late 2017 to 2018, as investors sought to enter the budding business that was emerging from prohibition as states relaxed their laws. But the market tumbled over the past year as that optimism faded amid challenges that include a patchwork of state regulations and no access to traditional banking services. This has left the industry, which can’t sell bonds or tap bank loans, starved for access to liquidity.
Doug Gordon, head of LeafLink Financial, said in a phone interview that the deal is the first to introduce liquidity to the broader market. New York-based LeafLink operates a marketplace for marijuana retailers to buy cannabis products. It already provides some factoring, or trade credit, to facilitate transactions in some areas of the U.S.
“To date, most of the smaller operators haven’t been privy to any debt capital,” said Gordon, who also serves as executive vice president for the parent LeafLink. “This is the first product that has the ability to inject a large amount of liquidity to serve the industry at large.” [Read More @ Bloomberg]