Money Management: Cannabis Dispensary Cash Flow & Financing Strategies

With cannabis still banned at the federal level, the lack of access to traditional funding institutions for cannabis businesses has historically created challenges for managing cash flow.

In this Meadow webinar, the teams at Stronghold, ercTree & FundCanna discuss how dispensaries can get the money they need to run and grow their business via loans, employee retention credits as well as payment processing.

Here are three solutions for cannabis retail operators to improve their cash flow and manage their finances:

Employee Retention Credits with ercTree

Within 50-90 days, companies can receive this payroll tax refund from the United States Treasury Department (applicable to US businesses who kept employees on payroll during the pandemic). The team at ercTree specializes in helping cannabis companies qualify for and receive their refund checks from the government.

"We've qualified so many cannabis companies, and in fact, we don't have the PPP loans, so cannabis companies are actually getting the highest per employee value," says Gian Paolo Veronese, Affiliate at ercTree. "You can get up to $26,000 per employee; if you've got 10 employees, that's potentially $260,000. This is something the government wants to actually get into people's hands and it's a great source of cash because it's not like the PPP where they tell you what you need to do with it. You literally can do whatever you need to do with this; you can pay back taxes, you can hire more people, you can buy whatever you need for your business; there's no restrictions on this money."

Cannabis Loans with FundCanna

Get access to capital, with deployment to your bank account within 24-48 hours. "In terms of access to capital, this is a good time to look at debt," says Eric Kaufmann, COO of FundCanna. Even if it's a bit more expensive relative to the non-cannabis industry, equity is far more expensive than you even realize. And, and debt is probably less than what you will have to give up if you went to raise equity right now. And likely you're raising equity on a down round given the state of the economy and the cannabis environment, which you don't really want to have to do. The debt providers in the industry today, we are really trying to understand your business and be a partner. I don't want to be a lender of last resort. I want to be a lender that gives you access to capital to enable you to facilitate growth, to pay your vendors to buy the raw materials so you could fulfill an order. We don't want you to get overextended. We want to help you run and grow your business. It's short duration lending; so your paybacks are micropayments so it never feel like too big a lift. Say you were approved for $500,000 and you pull down a hundred grand this week to make a payment to some of your vendors. Next week you pull down 50, and another 150 the following week. Each one of those pull downs is on its own schedule, so as you pay them down and pay them off, you can reload. It's basically a revolving line of credit, so to speak, so it gives you a lot of flexibility to use the money as you need it."

Merchant Financing and Payments with Stronghold

Accept ACH payments for your e-commerce or storefront dispensary, and after three months of processing payments, you can request merchant cash advances to help you manage operations.

"We started off with embedded payments for e-commerce; converting that cash into digital payments was a no-brainer during the Covid outbreak," says Sean Bennett, CTO & Co-Founder of Stronghold. "As customers want to be in store again, that was the next place to start displacing cash. Some of the benefits that that has given us is having easier reconciliation, accounting, transfer of money; you're not dealing with cash transport, things like that these days. It really has opened the door to some financing methods, right? We found that financiers of our merchants found it much easier to get their head around the way that the money settled into their accounts, and also the potential to be able to collect maybe a percentage of those incoming settlements de-risked the whole lending process to them. We eventually decided to launch our own merchant financing program because we already have the relationship with the merchants.

We have all the digital data ready there to very quickly underwrite our merchant customers for essentially a merchant cash advance. Given your historic payment volumes through us, we can advance you some projected time period worth of your payments going through us. And from that point onward, we will just deduct a certain amount of your net settlement. So, we might say, okay, let's project out what the next six months of cash flow looks like through Stronghold. We will advance that to you now. But we're going to hold back, say 15% of your daily settlements going forward. So its really easy to digest in terms of how that's going to work on the accounting and the cash flow side."

Dispensaries utilizing Meadow’s complete cannabis retail software system save 20% a year in labor costs.

Huge Savings on Manual Labor, Automated Revenue Streams & Inventory Management with Meadow's All-in-One Dispensary POS

"Your inventory is your cash," says Meadow CEO David Hua. How you manage that inventory is of the utmost importance of getting things moved correctly, and not necessarily over discounting, but getting the product in the front of the right person at the right time; a lot of that can be done within your point of sale reports and dashboards. If you're not using your data for inventory forecasting and marketing, then you're just shooting yourself in the foot and not building the loyalty of your customer base. You can only go after and acquire new customers every so often. The ones that keep coming back are the ones that really give you that stability."

Within Meadow, it's easy to execute omni-channel sales from a single system, integrating brick-and-mortar stores (choose from flexible sales flows from traditional counter service to floating sales staff to the fulfilment pharmacy model), plus kiosks, e-commerce on your own website that allows for delivery or express pick-up, as well as integrations with Weedmaps, Leafly, Jane and more, to create a seamless and consistent customer experience, no matter where they're shopping. By offering multiple channels for customers to interact with your dispensary, you can increase engagement and build stronger relationships with them. This can lead to higher customer loyalty and repeat purchases. With omni-channel sales, you can collect data and clean insights from all channels, including customer behavior, preferences, and feedback while streamlining workflows for your staff to allow them to focus on more valuable revenue-generating tasks.

Replace multiple bills, data loss, and clunky workflows with Meadow's top-rated cannabis retail system that helps you automate your revenue streams.

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