While we wait SAFE banking to pass how are cannabis companies are accessing banking Dan Humiston speaks with the CEO of Safe Harbor Financial, Sundie Seefried, to discuss how her company helps cannabis businesses bank their money. She shares how they expanded the business across the country and how they've helped other financial institutions set up similar programs. They discuss the relationship between Safe Harbor Financial and Partner Colorado Credit Union, as well as their recent arrangement. Produced by PodConx MJBulls - https://podconx.com/podcasts/raising-cannabis-capital Dan Humiston - https://podconx.com/guests/dan-humiston Sundie Seefried - https://www.linkedin.com/in/sundie-seefried-748194130/ Safe Harbor Financial - https://shfinancial.org/ Recorded on Squadcast - https://squadcast.fm/
While we wait SAFE banking to pass how are cannabis companies are accessing banking
Dan Humiston speaks with the CEO of Safe Harbor Financial, Sundie Seefried, to discuss how her company helps cannabis businesses bank their money. She shares how they expanded the business across the country and how they've helped other financial institutions set up similar programs. They discuss the relationship between Safe Harbor Financial and Partner Colorado Credit Union, as well as their recent arrangement.
MJBulls - https://podconx.com/podcasts/raising-cannabis-capital
Dan Humiston - https://podconx.com/guests/dan-humiston
Sundie Seefried - https://www.linkedin.com/in/sundie-seefried-748194130/
Safe Harbor Financial - https://shfinancial.org/
Recorded on Squadcast - https://squadcast.fm/
[00:00:00] Today, MJ Bulls raising cannabis capital. We are joined by Sunday Siegfried, the c e o of Safe Harbor Financial Sunday. Welcome to the show.
Well, thanks for having me. Happy to be here.
Well, I'm excited that you could join us today. I've been reading a lot about your company recently. I've seen some press releases and then, you know, with all the talk of Safe banking and I, this is, you know, the timing of this is great and I'm really glad that we could do this today.
And since 2015, Safe. Harbor Financial has been helping cannabis companies bank their money. Let me say that again. Bank their money. I know everyone thinks that you can't bank cannabis, that banks do not accept cannabis companies, but, but you've, you're solving this problem. Let's jump right in. How are you doing that?
Well, it wasn't without its own risk.
Okay.
So, you know, in 2014 when I started researching it, I, you know, every agency, [00:01:00] even the federal agencies, they all wanted the money banked. They just wanted it banked correctly. And that's where the whole compliance problem comes in because it's a cash intensive business.
There's an existing black market, and even more so a black market history where that, that the, you know, legacy funds are actually trying to make their way into the system. So they just wanted financial institutions, banks, and credit unions to protect the financial system. And that just takes a lot of compliance.
So I just had the guidance. And decided I was going to do, I was gonna take all my years as c e O in working with examiners and regulators and auditors, and put together the highest compliance program I can to see if we could stay in business. And even I was scared. I did it under the radar until I knew we were doing it right.
Yeah. That's crazy. That's crazy. So essentially you just took the rules that were in place and shared them. Now you shared that with other ins, uh, financial institutions to make sure that they were comfortable with, with all your, with all your clients. Is that how you [00:02:00] did that?
Well, um, at the time that we started it, for the first seven years of the program, we were, I was actually the c e O of partner, Colorado Credit Union. So we did it under the credit union, under normal banking regulations, and. You know, it really was interesting the first, you know, four or five years we went through 16 state and federal examinations because nobody knew what the cannabis industry looked like.
Nobody knew what the performance of the funds would be. And so there was a lot of debating going on in terms of cutting that path between regulators and financial institution. So, you know, who wants to go through all that pain and debate? This is my interpretation, this is why I think I'm right. And, and, and normally during that period of time, you would.
Six examinations and we had 16.
Oh my gosh. Oh my gosh. So you figured out the roadmap and once you figured out the roadmap, then you expanded it so that you eventually other institutions could participate. Is that, is that sort of the game, how it [00:03:00] worked?
that's correct. And, and that was really a risk mitigating factor for the credit union at that point in time. We didn't wanna be the only ones doing it because then all regulator eyes and law enforcement eyes would be on us, you know? So we, we said, well, let's share some knowledge out there. So we shared and we helped.
Financial institutions set up a similar program using our software and all of our policies and procedures so that examiners could get a standard across the country.
Well, and you mentioned across the country you're, it's, it moved right from Colorado to other states. So you're, it's not just li um, limited to Colorado. Now you're in other states.
We are actually processing cash from 40 different states across the country.
Wow. And, and, and Eddie into the tune of billions,
Yes, yes. As in fact I was just doing that report. You know, we are getting ready to cross over 18 billion and, you know, I kind of monitor this and I, but I also monitor the performance of the funds. You know, what's coming in, what's going out, what stays [00:04:00] in the bank accounts, in terms of what we can actually loan off of.
Okay. All right. Well, I'm in the, I I'm looking at a press release right now. Safe Harbor Financial. You, you, you mentioned a minute ago about the, your part, the partner, Colorado Credit Union. I saw in the press release that, that, that you are, You've worked out an arrangement now with, with the two entities.
Can you maybe give, add a little more color to that new relationship?
Sure, because that was a very difficult last five months.
I bet.
what really happened was we were supposed to, uh, list on, on the Nasdaq back in um, June, and what happened is we needed to do some more education because NASDAQ doesn't really want plant touching companies. So they went through all of our contracts, everything, even to know that if we were going to ever have to liquidate a property that was, um, un under a credit facility, that we would never touch the plant.
So, Complications there when you're dealing with [00:05:00] cannabis. What happened during that summer was the SPAC market kind of crashed
Yeah, I.
and we got, it was the worst time ever for us to actually do that D spac and, and get listed. And we went from 70 million in pipe investors down to 23 million in pipe investors That.
The debt and a lot of second thoughts on my back at Safe Harbor Financial. But you know, I, I couldn't just walk away from this baby we had created for eight years and it was a profitable business for eight years and cash flow positive and had all these employees kind of relying on me to see this forward.
And so, partner Colorado who. You know, the parent company, uh, prior to the transaction said they didn't wanna see it die either. So they gave us a forbearance agreement, no payments until we could restructure something that would give us a clear pathway to succeed. So we spent the last five months negotiating with this [00:06:00] and that 60 plus million dollars of debt that fell on our.
Which we could not afford to repay and, you know, be able to launch a, a solid company. Um, they, they converted, you know, down to 11.5, uh, million shares and they then gave us a long-term debt of 14 point, uh, for 14.5 million debt that's serviceable at four and a quarter percent. So this is reasonable and, you know, based upon our performance and our historical performance, financially, we can.
This debt now and move forward and grow?
Oh, that's Anes Gives Pro. I'm sure that gives all a lot more comfort to not just the nasdaq, but all your clients, all the people that you work with. Now that you have that behind you, you can just focus on your growth.
Yes, I'm actually, that's exactly what I said. After we put the press release out and did our earnings call last week, I looked at my CFO F and my legal counsel, and I'm like, now we can get back to business [00:07:00] here. Let's.
Yeah, really get, get back to funding this indu, helping this industry grow through banking and getting, get, getting more, more people to get their cash out of the shoebox and get it into the banks, which is where, where it needs to be. I mentioned that you're a publicly traded company and so people can, if, if they're interested, I'll have all the information later, um, for the, to, to purchase the stock, but in addition to this, I, I noticed on your that you're also, um, providing loans to cannabis companies.
Can you tell us a little bit about.
Sure. So when we went into the depository relationship in 2015, it was our objective to try to normalize banking for the industry. Give them checks, give them debit cards, give them what they need so they could do their business and operate and we'll watch the money and we'll watch the financial system.
And never did I have a company not. Want to comply because it's a compliance industry as well. They're so heavily regulated. So in, in the last two years, we've put together a lending [00:08:00] program and we actually loan off a, a percentage of our deposits. So our cost of funds is much lower than going to the capital markets.
To get funds and then re loan them out. So that is a, a competitive advantage for, for us, and we work very closely with our financial institutions to set the stage, but because we're working on their balance sheet and with financial institutions, we have to land like financial institutions. We can't make like projection loans and investment loans.
We wanna make collateralized loans with which, you know, financial institutions are actually. Um, comfortable with, and also we have to, if we get a 50 or $60 million credit facility request, we want, you know, all of our financial institutions to participate in that risk. So we won't just place it on one balance sheet, but on a couple of them and standardize it for all of them.
Well, it's great news for the, for the companies that are looking for loans. [00:09:00] It's a great, great news because now it's, it's more s. I don't wanna say legitimate, it's more standardized, more what they, what, what most businesses they go, you go to your lending institution to get the loan, you go to the same people that you're doing your banking with, or a lot of times your bank, your, the people that you borrow money from, it just makes sense.
It's, it makes sense. Um, before, before we wrap up, If I were a ca, a lot of the cannabis indu companies that are listening to this show right now are maybe paying exorbitant fees for their banking if they can even get banking. Can you walk us through the process if they wanted to investigate pr, perhaps moving to a different banking and working with, working with you to help facilitate that?
sure. So the first thing I have to say is that, you know, because of the amount of compliance, we file nearly a thousand reports a month on these counts, and that's because the regulations are pretty stiff for financial institutions. That causes an extra compliance burden. You see, financial institutions get in and [00:10:00] get out because they can't afford the compliance.
So I just wanna say that those fees are actually you. Well deserved at the financial institution for the amount of work and the risk because we are still subject to prosecution and other risks in this environment. Um, as far as the lending goes, you know, we're doing anything from seven point a 5% up to 13% on these credit facilities.
So when we get the loan and the depository relationship, we start looking at the whole package, which will ultimately reduce their, their account fees. So that's our objective there. Um, if they wanted to look, if there's always a due diligence process, but year by people who, where they have that depository services, they do wanna get their credit facilities and vice versa.
So we, we encourage that. And of course our, our website. Safe Harbor financial sh financial.org. And that's where they can start the inquiry. Uh, their, their inquiry and we have a good sales team and we have a good onboarding team that will walk them through everything. [00:11:00] It is complex, but you know, we look at that long-term relationship.
We've been low cost provider in the industry, even on depository services for a long time, so we wanna get them. And keep them in our program and give them the services and expand our services through this public, um, uh, public, uh, entity that we've created by doing some m and a strategy to bring in other pioneers who are offering solid services for several years and, uh, bolt them in to, to the safe harbor.
Man, there's so many great, um, benefits to working with you, just based on what you just said there. That's, I can see where a lot of people be. Whether you're an investor, you're a cannabis company looking for financing or a new bank, or you're looking for a loan. These are a lot of reasons for you to just check in the show notes.
I'm gonna have all of Sunday's information and all safe harbor's information in the show notes. So you could just click the link there and in case you missed the [00:12:00] website, it'll be in the show, in the show notes Sunday. This is really interesting stuff. I, I am. I'm so thankful that we have people like you in our industry that can help get, get us, get us over some of these hurdles that really shouldn't be there, but they're there nonetheless.
And instead of complaining about 'em, you're just getting it done. So thank you for everything that you've done so far and, and we'll be doing in the future. And also, congratulations on your re this, on this getting, getting this over the finish line. So thank you for being on the show.
Thank you for having me. Appreciate.
That was great. That was.