This month’s High Canada was over at O’Cannabiz. We met some interesting and knowledgeable guests. We had the pleasure of sing down with the Marijuana Money Man, Scott Jordan of Dynamic Alternative Finance.
Scott, tell us, how did you get this amazing title as the “Marijuana Money Man”?
The Denver Post Cannabist show host first gave the nickname to me when I appeared on the show in late December. I liked it and it stuck. Fox actually called me the same thing when I did an interview with them in San Francisco in late February and I quite like it, it has a nice ring, don’t you think?
It has an awesome ring to it, I love it! So tell us, how did you get into the business?
In 2013, when Colorado legalized the adult use of marijuana I knew it would be a big market place. I was working for Dynamic Funding, Inc. which is a leasing company that utilizes bank lines of credit. We could not use our bank lines of credit in order to fund these kinds of deals so what I did was I went to some private investors and said “Hey, would you guys like to participate in this and get back above average returns!” and since investors are constantly chasing yield they agreed. They funded a couple of deals and then one grew to another to another and now we have arranged a little over 27 million dollars in financing in the last couple years. We are here in Toronto looking to expand and add additional investing partners to fund these deals and borrowers who need capital. Right now, we have just over 100 with about 75 on a waiting list of companies to get in.
Sounds like a busy year for you! I noticed your business model; it’s slightly different from most venture capitalists?
Correct, we are really about helping existing companies expand from their already successful base. So, where we have been successful is in helping companies that are unable to access bank lines of credit and other bank types of facilities expand in to additional stores. For example, one of the best success stories we’ve had is we started with a company that had 4 stores and they now have 12 retail stores and continue to grow and expand. What we did is we helped them with build out capital. We provided the funding to build stores and be able to retain 100% of their equity.
I have one of the best jobs in the country. I get to travel and speak with so many innovative and creative marijuana business owners. Big shout out to Neill and Danya Dixon of O’Cannabiz for putting on that wonderful dinner at Casa Loma in Toronto.
Speaking of travel, how do you think the Canadian tax laws and different from the US tax laws?
So there are a couple of big differences and a few big things I’m very excited about in terms of Canada. Number one, in the US we have an IRS code called 280E which was enacted in 1982. As a result of this it raises the effect of tax rates to sometimes over 100% for companies because unless they have labour and other things associated with cost of goods sold they’re unable to deduct roughly 25-30% of their SG & NA expenses. Many mes they are profitable but the tax rate that they are paying is higher than the profits that they’re making. The big problem I see with US companies is people end up owing much more in taxes than they made in profits . In addition, in Canada, the values are just enormously high compared to the profitability of the companies. One unique ingredient in terms of the Canadian market is you’re able to export. In Germany, the government will allow healthcare and insurance to provide CBD and cannabis related medicine. That’s a huge advantage anywhere you see insurance companies covering the cost of that you’re going to have more and more people utilizing that then people are not afraid to go to a doctor and seek specific treatments for ailments. Export opens up the entire world. We’re seeing country-by-country ending the prohibition on cannabis and embracing the medicinal values from it. It looks like Canada will end up legalizing it for adult use in 2018 and that’s a market for about 40 million people or so that all of a sudden anyone of age will be able to purchase. If you put enough capital into any type of business the smart guys will figure out a way to make it work.
Scott thank you for your me! What are you up to next? Any future speaking engagements?
Well I’m going to be speaking twice in Washington DC on May 16th at the Marijuana Business Conference and Expo. I’ll be speaking about how to find the financing you need in order to grow your marijuana business in a similar situation as here [O’Cannabiz] where the first day before the show they are having a pre-show boot camp.
I will also be speaking July 18th and 19th at The Cannabis Business Leadership Forum on a Canadian US panel for best practices in cannabis. I’m very excited to speak about that because being an early pioneer in Colorado; I did my first marijuana loan in 2009. I think there is a lot of experience that I can bring to Canadian citizens and businesses to avoid some of the mistakes we made early on. It’s always easier to follow someone to avoid the pitfalls and potholes that we ran into and I think it’s a very exciting me for the medicinal benefits and the changes and upgrades we are seeing in terms of dosing and the other benefits we are seeing on the medicinal side of things. I’m very excited to be a pioneer in the industry and I’m very excited to share the knowledge that I have.