Entrepreneurs looking to build a company in the cannabis space often wonder what’s the best strategy for raising capital, and that includes setting up the right capital structure, also known as a capital stack. 

This structure takes into account all forms of equity and debt invested in the company.

“You do need to start off with the foundation of your capital stack, which is the equity stack”, says Steve Ham, managing partner at Altmore Capital, a lender for the cannabis industry that has closed over two dozen deals since launching in 2017, to the tune of about $350 million in senior lending.

A first step towards building the capital stack involves finding a strong equity partner that can move with the startup as it finds its best strategy.

Secondly, Ham advises meeting a “great lending partner” and developing a strong relationship with them to be able to have straightforward conversations if bad times arrive.

“Because this is a growing industry, it changes very quickly, so you want to have a deep equity stack, and a modest amount of leverage,” says Ham. 

Ham spoke live on Wednesday at the Benzinga Capital Conference in Chicago, in a conversation moderated by Irina Dashevsky from Greenspoon Marder LLP, along with other expert cannabis investors.

Aim For A Real Estate Play

In …

Full story available on Benzinga.com