A BC-based credit union that has partnered with a BC financing agency to provide invoice factoring to BC cannabis producers says they have already provided more than $5 million in payments to the industry since launching earlier this year.
They’re ready to expand the program to more BC cannabis growers and processors.
Community Savings and We Can Capital Inc. first launched the pilot project in February aimed at giving BC cannabis producers more direct access to working capital, allowing participants to essentially sell their invoices from the BC or Ontario distribution centres.
Factoring is a financial service where a business can sell its outstanding invoices to a factoring company in exchange for immediate cash.
Under the program, a BC cannabis producer delivers its finished goods and issues an invoice to the provincial board with which they have a sales agreement. Rather than waiting 14, 30, or even 60 days for payment from the province, producers can sell that invoice, receiving a 75-82.5% advance from Community Savings and We Can Capital on the same day.
“Cannabis businesses should have access to the same banking products as every other business in Canada,” says Mike Schilling, President and CEO of Community Savings Credit Union. “We are proud to be a pro-cannabis industry credit union that is fighting against banking discrimination and stepping up to provide affordable access to invoice factoring for licensed producers.”
“The fact that we just launched this program in February and have already achieved $5.3 million in invoice factoring this year, demonstrates the need and demand for this service. We are here to support BC cannabis producers and help grow their businesses.”
As an example of how the program has matured, Community Savings says it has already been able to increase the purchasing limit from $500,000 to $750,000 for Nelson, BC-based cannabis producer Woody Nelson.
Toby Summers, Director of Woody Nelson Inc., said: “Community Savings’ and We Can Capital’s foresight to create offerings to support BC’s underserved cannabis industry has been transformative for Woody Nelson. The liquidity provided by Community Savings’ factoring line has ensured Woody Nelson has the necessary supply chain inventory to support rapid growth, which has been instrumental in achieving our first quarter of positive EBITDA.”
Joshua Reynolds, Partnership Director of We Can Capital Inc., says the success of a company like Woody Nelson, which he says has been able to increase its output because of the more ready access to capital, proves the factoring program works and proves they are ready to move out of the pilot phase and expand it to more BC producers.
“Partnering with Community Savings to work with Toby and the Woody Nelson team reaffirms my dedication to bolstering the financial stability of this dynamic industry. Witnessing firsthand the transformative impact of instant working capital on a company is truly inspiring. It’s a privilege for We Can Capital to contribute to such a vital sector and support the growth and success of businesses like Woody Nelson.”
Earlier this year, Dayna Lange, the CFO of Tricanna Industries and Community Savings Credit Union cannabis member, told StratCann the program will help cannabis producers like Tricanna build better supply chain relationships.
“Having instant access to our own money has been a game-changer for the way we approach the continued growth and reputation of our business,” says Lange. “With a one-day funding and settlement model, we are able to continue to increase sales and maintain strong relationships with our suppliers. This is long overdue, and we are very encouraged to see mainstream financial services supporting BC cannabis.”
