Safe Harbor Archives - Green Market Report

StaffJune 27, 2022
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The Northern Lights Acquisition Corp. (NASDAQ: NLIT), a special purpose acquisition corporation, rescheduled its special meeting of stockholders to Monday, June 27, 2022 at 4:00 pm ET. The vote was originally planned for June 24 in order to approve Safe Harbor Financial as the qualifying transaction for the SPAC. The deal is valued at $185 million or 9.1x 2023 EV/EBITDA vs. 9.7x peer group average according to Northern Lights. The enterprise value of the IPO is 2.0x versus the cannabis SPAC average of 3.0x. Once complete, the company will begin trading on the Nasdaq stock exchange under the ticker “SHFS”.

Protecting the SPAC

Last week, Northern Lights said that it had entered into a redemption backstop arrangement in the form of an OTC Equity Prepaid Forward Transaction agreement for up to $50 million with Midtown East Management NL LLC. Midtown East has agreed not to sell any public shares it purchases in connection with the planned business combination. Northern Lights anticipates that the shares purchased in connection with the agreement will help ensure the maximum redemption threshold condition in the business combination agreement will be met. The redemption backstop arrangement is in addition to the $60 million PIPE commitment from certain accredited investors previously announced on February 14, 2022.

Safe Harbor was founded in 2014 and is a first mover in providing a variety of banking services to cannabis businesses including, but not limited to, managed deposit accounts and commercial lending through its affiliation with Partner Colorado Credit Union. Since legislation protecting cannabis companies’ access to standard banking actions hasn’t been enacted, companies like Safe Harbor continue to fill a need in the industry. Safe Harbor says it is well-positioned to expand its compliance solutions and other service offerings with a proven track record for repeatedly enduring the tests of regulatory scrutiny.

Loan Provider

Recently Safe Harbor Financial closed on a $5 million senior secured loan to Solar Cannabis Co., an established vertically-integrated cannabis operator headquartered in Somerset, Massachusetts. Solar Cannabis said it would use the funds to further accelerate its growth. The transaction marked the evolution of Safe Harbor’s senior secured lending program, which was established to provide loans to cannabis operators in states in which cannabis is legal. Solar Cannabis’ loan is the first extended by Safe Harbor outside of its home state of Colorado.

Safe Harbor, through its predecessor entity, began offering loan services in 2020 with the buildout of its commercial lending program in late 2021 to help cannabis operators overcome their historic reliance on expensive, non-traditional forms of capital. Since initiating the program, the company has developed an actionable pipeline of approximately $500 million across nine states from both new as well as existing clients.

 


Debra BorchardtFebruary 14, 2022
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Cannabis banking company Safe Harbor Financial (SHF, LLC) will go public through the SPAC (special purpose acquisition corporation) Northern Lights Acquisition Corp.  (NASDAQ: NLIT) has chosen it for the qualifying transaction. Safe Harbor is a subsidiary of Partner Colorado Credit Union, a Colorado-chartered credit union based in Arvada, Colorado. Safe Harbor will be led by Sundie Seefried, Founder and Chief Executive Officer of Safe Harbor.

“The acquisition by Northern Lights will allow Safe Harbor to advance its efforts to remain the premier cannabis financial services provider,” said Seefried. “Over the last seven years, our team has pioneered what many consider to be the industry standard cannabis banking platform by establishing strong internal processes and controls, and by complying with rigorous state and federal banking guidelines. Through the SPAC transaction, we believe Safe Harbor will be well-positioned to expand its suite of financial services for our existing and new clients and continue to support the growth of the cannabis industry at a very high level. Our goal is to become a ‘one-stop-shop’ for cannabis business financial needs.”

Safe Harbor was formed in 2015 by the PCCU to provide an unmet need, which was compliant access to banking and financial services for the cannabis industry. Over the past seven years, Safe Harbor has grown to nearly 600 accounts spanning 20 states. Additionally, Safe Harbor has processed over $11 billion in transactions with $4 billion in 2021 and has grown deposits at a 73% CAGR since inception. Safe Harbor addresses these challenges with its industry-leading financial services and commercial lending platform, providing its clients with increased safety and security through access to normalized banking and cash management. Through its proprietary risk management and compliance program, Safe Harbor operates under regulations promulgated under the Bank Secrecy Act and additional FinCEN guidance, as demonstrated by passing 15 state and federal examinations since inception.

Transaction Details

Northern Lights will acquire Safe Harbor for a total of $185 million, of which $70 million will be paid in cash and $115 million in shares of Northern Lights Class A common stock. The estimated post-transaction equity value of the company will be approximately $327 million, assuming no redemptions by the stockholders of Northern Lights. The transaction will provide up to $107 million of gross proceeds (assuming no redemptions), including $117 million from Northern Lights’ cash-in-trust and a fully committed $60 million PIPE from institutional investors.

“Safe Harbor is the most compelling investment opportunity we have encountered in the cannabis industry as both operators and investors. Safe Harbor is one of the only multi-state financial service organizations to successfully navigate the highly regulated cannabis banking industry, providing services that operators in other industries take for granted,” noted John Darwin and Joshua Mann, Co-CEOs of Northern Lights, both of whom will remain on Northern Lights’ Board of Directors upon completion of the transaction. “Setting the gold standard for regulatory compliance, as well as providing access to growth capital across the entire cannabis value chain, Safe Harbor is uniquely positioned to scale. We are confident that our collective experience in the cannabis industry and strong pipeline of lending opportunities are complementary to the incredible business Sundie and her team have established.”


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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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