MariMed, Inc. has closed a $35 million secured credit facility with the goal of expanding cultivation and processing in four state markets.
The credit facility has a three-year maturity, with the option to extend to a five-year maturity under certain conditions. MariMed borrowed $30 million at close, but it can draw down an additional $5 million over the next six months.
“I am delighted to announce the closing of this transformative credit facility,” said Jon Levine, MariMed president and interim chief executive officer. “MariMed is known for its operational and financial discipline, resulting in one of the strongest balance sheets in the cannabis industry, enabling us to secure this funding. While we are capable of funding our current growth plans with cash flow from operations, the time is right to raise capital and accelerate these plans, which we believe will result in meaningful returns to our shareholders.”
MariMed will use the funds to complete the build-out of a new cultivation and processing facility in Illinois and a new processing kitchen in Missouri, as well as for expanding existing cultivation and processing facilities in Massachusetts and Maryland. The company will also use the funding for acquisitions, other capital expenditures and repaying Kind Therapeutics seller notes from the acquisition in April 2022.
The credit facility bears interest at a floating rate based on bank prime rate plus 5.75% and includes 30% warrant coverage priced at a 20% premium. MariMed can repay the principal loan balance without penalty after the first 20 months.
“This credit facility allows us to significantly accelerate the completion of our expansion projects, which we believe will drive meaningful revenue and EBITDA growth in 2023 and beyond,” said Susan Villare, MariMed’s chief financial officer. “Including this facility, our blended interest rate of 10.5% and debt/EBITDA ratio of 1.5x remain among the lowest in the cannabis industry and speaks to the strength of our balance sheet and our ability to generate significant positive cash flow from operations.”
Chicago Atlantic Advisors, LLC acted as lead arranger, with Silver Spike Investment Corp. for the senior secured credit facility. Chicago Atlantic is also the administrative agent for the credit facility. Echelon Capital Markets acted as the financial advisor to MariMed.