The Bengal Bite 🐯 | "Canna"nomics | July 30, 2020
In our global economy, a robust infrastructure exists to facilitate the supply, demand, and flow of goods. Supply chain finance, dedicated software, and lean manufacturing are some of the common tools that keep the established economy moving but have yet to be implemented at scale in cannabis. Given the nascent stage of the cannabis industry’s development, accepted rules of economics do not yet quite apply, leaving the sector to sort out its own laws of “canna”nomics.
That said, the rapid growth of legal cannabis has spurred the development of “traditional” tools of commerce within the cannabis industry. Just last week, the industry’s largest supply chain finance deal was completed (article #2 below), and a new startup secured financing to train and place cannabis workers (article #3 below).
As the infrastructure to support cannabis grows, we believe the economic impact of this industry will continue to multiply. We see the complex “canna”nomics behind the industry as a driver for growth and innovation.
The Bengal Capital Team
US cannabis stocks: a good investment in a bad economy
Cannabis valuations and investor sentiment are beginning to see a rebound from the lows earlier in the year. US cannabis operators remain an interesting investment opportunity even during the pandemic given their underlying fundamentals (Green Thumb Industries, Curaleaf, and Trulieve are expected to surpass $100 million in quarterly revenue this year) and due to increasing regulatory visibility in the space. Read more on what Kris Krane, President of 4Front Ventures, is thinking comes next for cannabis in Forbes here.
LeafLink debt deal shows cannabis entering a new phase
New York-based LeafLink has closed a $250 million credit facility to provide credit to cannabis operators. While LeafLink already provides some factoring (trade credit) to facilitate transactions, the majority of smaller cannabis operators currently do not have access to debt capital. This new loan facility will allow LeafLink to expand factoring across the cannabis landscape, helping supply chains operate more efficiently. Read more on LeafLink’s monumental credit facility in Bloomberg here.
Cannabis gig work startup Kanna lands $500K to put people back to work
Kanna, a gig work platform, trains workers in need of employment for jobs in the legal cannabis industry and connects them with vetted farms and dispensaries in need of skilled employees. Read more about Kanna in AmericanInno here.
US cannabis industry's economic impact could hit $130 billion by 2024
According to an analysis from the Marijuana Business Factbook, the cannabis industry’s impact on the US economy is already at $46 billion and is projected to increase significantly. MJ Biz estimates that for every $1 consumers/patients spend at dispensaries and recreational marijuana stores, an additional $2.50 of economic value is injected into the economy – much of it at the local level. Another reason to visit your local dispensary (and tip your budtender)! Read more on the increasing economic impact of cannabis in MJBizDaily here.
