Curaleaf (CURLF -2.65%), a multi-state operator (MSO) of marijuana dispensaries, announced Monday that it has secured a new round of financing. The company said it has completed a $50 million secured revolving credit facility with a three-year term.
It added that it has already fully drawn from the facility.
The borrowings from the "revolver" bear an interest rate of 10.25%. While that is significantly higher than current rates for many other types of corporations, it is comparatively reasonable given the at-times exorbitant interest cannabis companies are forced to pay for loan products. The industry is chronically loss-making as a whole, and because of the drug's illegality at the federal level, access to many other types of funding is limited.
In its press release touting the financial arrangement, Curaleaf said it expects to use those drawn monies to "fund capital expenditures to support future growth initiatives, potential acquisitions, and for general corporate purposes." It didn't get more specific.
The company did quote its CEO, Joseph Bayern:
As Curaleaf continues to successfully execute on its growth strategy focused on leveraging the rapidly expanding market for U.S. medical and adult-use cannabis, particularly in light of the recent election results and their expected impact on the sector, the new revolving credit facility we announced today provides additional financial flexibility to our capital structure as well as the opportunity to create future value at a more favorable cost of capital.
More funds are always welcome in the cash-starved marijuana industry -- particularly at relatively modest rates -- so Curaleaf's stock saw a 4.7% boost on Monday, while the S&P 500 index fell by 0.7%.