The US cannabis industry is worth billions of dollars. Investors poured $10 billion into the sector in 2018, and experts predict that $16 billion will be spent this year. However, the regulations surrounding the industry at the local and federal levels make it nearly impossible for cannabis-based companies to access the same financial services allotted to other companies, such as short-term financing.
Founded in 2018, Bespoke Financial is the first licensed commercial lender focused on the cannabis industry.
“Bespoke offers unique financing options to alleviate working capital limitations across the cannabis supply chain,” CEO George Mancheril said in a statement.
Bespoke Financial is providing such a groundbreaking service in the cannabis market that Casa Verde Capital, the investment firm founded by Calvin Broadus, Jr— better known as hip hop mogul Snoop Dogg—led the company’s latest funding round.
“Cannabis will become a broad, mature industry just like any other, and if that is going to happen, there needs to be a debt structure that can support that,” Mancheril told TechCrunch.
A former Goldman Sachs and Guggenheim Partners banker, Mancheril manages the financial services company along with co-founders Benjamin Dusastre and Pablo Borquez-Schwarzbeck, two FinTech entrepreneurs in the agricultural sector. As the co-founders of ProducePay, Dusastre and Borquez-Schwarzbeck established a financial services company with a focus on produce farmers throughout the Americas, financing over $2 billion in perishable commodities.
Using ProducePay’s business model, Bespoke Financial uses ProducePay’s underwriting model, risk management controls and technological expertise to serve the cannabis industry.
By increasing access to short-term financing for businesses in the industry, Bespoke Financial plans to facilitate growth in the US cannabis sector, starting in California.
“While the US legal cannabis market is forecasted to grow over 20 percent annually, reaching $23 billion by 2022, the industry’s true growth potential is limited by long cash flow cycles throughout the supply chain and a lack of scalable and efficient capital sources,” the CEO explained. “Our approach will dramatically improve cash flow cycles across the supply chain and provide scalable working capital to fuel our clients’ growth.”
The company’s $7 million funding round was led by Casa Verde Capital with participation from Greenhouse Capital Partners, Outbound Ventures and others. The funds will be used to extend Bespoke’s current online platform, team and marketing efforts.
“In general, in the cannabis industry overall, it’s difficult to access any part of the financial system,” said Karan Wadhera, a managing director at Casa Verde. “Now that we’re moving into a place where equity financing is getting expensive, a company like Bespoke plays an important and valuable role in the ecosystem to help young brands and mature brands get access to working capital when they need it the most.”