Feuerstein Kulick LLP was a sponsor at the Benzinga Cannabis Capital Conference on February 25-26, 2021. The information contained in this article in no way represents investment advice or opinion on the part of Benzinga or its writers and is intended for informational purposes only. Navigating through the different complexities in the cannabis industry with limited liquidity sources and a state-by-state regulatory regime is time-consuming and can add an extra cost to a company’s structure. If a company doesn’t strategically plan ahead to address growth and capital needs, it can be detrimental in the increasingly competitive market. Thus, financial and legal planning is crucial in the evolving cannabis landscape, and having an experienced, reliable legal team can make or break a company. In recent months we’ve seen several high-profile transactions achieving scale through M&A activity. From names like Curaleaf Holdings Inc. (OTCQX: CURLF), Heritage Cannabis (CSE: CANN) (OTCQX: HERTF), Jazz Pharmaceuticals (NASDAQ: JAZZ) GW Pharmaceuticals (NASDAQ: GWPH), Cresco Labs (OTC: CRLBF), Canopy Growth Corp. (NASDAQ: CGC) and Indus Holding Inc. (OTCQX: INDXF) acquiring Lowell Herb Co. among others, the market will keep gaining momentum. Without current safe banking and federal legalization, M&A is one of the only ways to scale outside of the process of applying for and winning licenses in each state where you want to operate. Debt financing began to gain substantial attention in the cannabis industry in 2020 given the valuation declines that many cannabis companies suffered from when the “green bubble” burst in 2019. Nowadays, for companies that don’t want to further dilute their equity, the weapon of choice for raising capital is by obtaining secured debt, and this not for the faint-hearted because it requires lenders to get comfortable extending traditional types of loans where a key component of the collateral package is federally illegal. The lack of bankruptcy protection and restrictions on the transferability of cannabis licenses further complicate the traditional lending model and can be a deterrent for investors who have not experienced lenders in the industry. Facing the issues on a daily basis, Samantha Gleit has structured some of the largest term loans in the cannabis industry to date, and as part of International Women’s Month, we highlight Gleit’s expertise and impact on the cannabis debt market. Gleit is a trailblazer debt finance partner at Feuerstein Kulick LLP, a boutique law firm that represents clients in all aspects of the legal cannabis space, including investors, funds, leading technology and ancillary companies, brands, license holders and operators. Last year, Feuerstein Kulick LLP was named as one of the top seven cannabis firms in the country. Here’s what you need to know. Who is Samantha Gleit? Gleit’s extensive distressed debt and collateralization experience have helped several companies and lenders create a unique roadmap to obtaining capital quickly and efficiently. Feuerstein Kulick LLP has a deep regulatory practice focused exclusively on cannabis. Gleit has worked in novel restructuring strategies and risk precautions that have helped transform the primary forms of financing available to cannabis companies. Without a downside scenario, alternative investors (who unlike large banks are able to invest in the industry despite federal illegalization) can be hesitant to extend loans. Prior to the recent influx of large term loans, cannabis companies were not seeing these types of financing opportunities without major equity dilution because the collateral was too risky. In 2020, Gleit represented a syndicate of lenders to Curaleaf Holdings Inc. in a $300 million term loan, which was one of the first significant term loans in the cannabis space. It signaled a new potential source of liquidity for growing cannabis companies who do not want to dilute equity. Also, recently Gleit represented a syndicate of lenders who made a separate revolving loan to Curaleaf Holdings Inc. Gleit also structured a $250 senior secured credit facility with the factoring arm of a wholesale B2B marketplace, advised Navy Capital in leading in a private placement of convertible debt with 4Front (CSE: FFNT) (OTCQX: FFNTF) and advised lenders to other large multi-state operators such as Cresco Labs Inc. (OTC: CRLBF) and TerrAscend Corp. (OTC: TRSSF), in addition to loans with various single state operators. Many of Gleit’s deals (including the lenders’ identities) are confidential, but they include having represented stakeholders in some of the most publicly distressed cannabis companies, which have earned her a reputation as one of the top cannabis deal lawyers in the space. Additionally, Gleit is a mom, a wife and a mentor who is regularly featured on professional panels and at conferences. “Introducing more standardized debt structures to the cannabis industry has been very exciting, and also grueling. We’re far outside of the ‘safety zone’ that traditional lenders are used to, and the rewards for this risk are often substantial.” Why Is It Important To Talk About Debt? Cannabis is not federally legal, thus every state has its own set of regulations. Some companies might require preapproval from regulators, background checks, social equity or equity pledge agreements, among others, to receive licensing or even to continue. Also, federal bankruptcy is not an option — only certain states have regulations that address insolvency and state receivership programs. So, this is the start in how to build a strategy. Debt is an important factor in the capital structure of a company and contributes to its growth. For companies trying to preserve equity, it becomes an attractive option for companies trying to raise capital that are able to obtain debt on workable terms. Many cannabis companies are currently looking into debt as a funding tool due to cannabis stock prices and as an option that can provide more flexibility than real estate sale-leaseback deals. Feuerstein Kulick LLP – Leading By Example On behalf of lenders, Feuerstein Kulick minimizes fluid legal risks while maximizing collateral value, including distressed and bespoke asset classes. On behalf of borrowers, the firm is integrally connected to the fast-paced developments in the industry and protects the flexibility emerging companies need to grow. Gleit’s team recently advised on the completion of an $18 million credit facility to support the growth of a Maryland cannabis cultivation operation and is advising another private multi-state operator on an unsecured $50 million financing expected to close later this month. Helping To Right A Historic Wrong – A Pro-Bono Initiative To Help Victims Of The War On Drugs Feuerstein Kulick is positioned to help the people and communities disproportionately impacted by the failed war on drugs. The firm has embarked on a pro-bono initiative to help people with cannabis-related convictions reduce their sentences and expunge their records in New York and other states. There are still approximately 40,000 people incarcerated for cannabis-related crimes. Feuerstein Kulick feels a professional obligation to help these individuals. The firm is working with the Glass House Group and cannabis advocate Cheri Sicard to help reduce sentences and the records of people serving life sentences for federal marijuana-related crimes. See more from BenzingaClick here for options trades from BenzingaThe New European Cannabis Frontier — Clever Leaves Is Positioned For SuccessThe Real Value Of Influencers And Content Creation – ClubHouse Media Group Inc.© 2021 Benzinga.com. 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