Gaining Leverage: LeafLink, the cannabis wholesale marketplace, raised a $250 million credit facility (one of the largest debt deals to date) to support LeafLink Financial, its growing offering in supply chain finance. LeafLink Financial allows operators to eliminate costs and optimize cash flow for licensed cannabis operators, giving suppliers upfront dollars on customers’ orders in exchange for a cut when the payment is actually made. LeafLink already facilitates transactions by buying more than $100 million in accounts receivable per year, and the new facility will allow them to expand the offering more broadly.
Why It Matters: Can’t imagine Bespoke Financial is too pumped about this, eh? Supply chain financing is a pretty established concept, and it’s especially useful in cannabis where capital is constrained and expanding accounts receivable issues have doubly strained suppliers. It’s a logical move for LeafLink - the platform already facilitates nearly $3B in transactions annually, and this gives them another avenue to use that activity as a funnel it can further monetize. I’ve joked for a while that, eventually, all canna-tech companies become finance, data, or services companies. In LeafLink’s case, it’s looking like it might be trying for all three.
Closing the Deal: Curaleaf Holdings closed its long awaited $700 million acquisition of Grassroots, propelling the company from 18 to 23 states, over 135 dispensary licenses, 33 processing facilities, and 22 cultivation sites (1.6 million sq. ft. of capacity). Mitchell Kahn, Grassroot’s CEO, will join Board of Directors at Curaleaf, which will now focus its efforts in deepening its reach in the states it’s already operating in, rather than pursuing major new M&A opportunities. Meanwhile, some Grassroots shareholders are suing the company for allegedly negotiating the deal down while personally gaining improved economics.
Why It Matters: Say it with me: Deals Aren’t Dead! I’ll fully admit that, for a long period - as mega-deal after mega-deal collapsed, I did not think this one would make it across the finish line. But, ultimately, the two companies do fit together quite nicely and it does seem to meaningfully improve their strategic positioning (unlike, say, some other more debatable acquisitions we’ve seen by both Curaleaf and others). The relics of the era of the constant cannabis mega-deals have finally wound down - satisfying that it finished with a bang and not another whimper.