Speaker Spotlight: Rob Sechrist, Co-Founder & President, Pelorus Capital Group
Interviewed by Jen Coleman, CEO of My Elevated Experience
Q: Could you please offer a brief overview of Pelorus Capital for those who may not be familiar?
Pelorus Capital Group, also known as Pelorus, holds the distinguished position as the foremost source of commercial real estate financing loans for the cannabis industry. Pioneering this sector, Pelorus entered the cannabis lending market in 2016 and swiftly grew its real estate lending investments from an initial private placement offering of $100 million in 2018 and then upsizing the offering to $1 billion by 2021. Presently, Pelorus effectively manages assets totaling $424 million, boasting an impressive track record of 74 completed transactions. To discover more about Pelorus, please visit their website at www.peloruscg.com.
$100 million in 2018 to a remarkable $1 billion by 2021. Presently, Pelorus effectively manages assets totaling $424 million, boasting an impressive track record of 74 completed transactions, collectively exceeding half a billion in value. To discover more about Pelorus, please visit their website at www.peloruscg.com.
Q: We recently saw that SAFE Banking recently passed through the Senate Banking Committee. Can you explain what this means for the Cannabis industry?
While this marks a positive development for the industry, the next crucial step involves gaining approval in the House, and the passage of the SAFER Banking Act will pave the way for further legislative changes. Although the passage of this bill will certainly facilitate the ability of cannabis businesses to make cash deposits, what I consider to be the most significant advantage is enabling the processing of sales through credit card payments. Before this act, buyers were restricted to using cash as the sole payment method, which necessitated sellers to subsequently deposit their earnings into a cannabis-friendly bank. Presently, out of approximately 4500 banks in the United States, only 15% of them are cannabis-friendly depositor relations. The enactment of this bill mayalso streamline sales transactions by expanding the use of credit cardsand reducing cannabis cash transactions.
Q: Can you help elaborate on potential exposure for investing in a cannabis-related asset class?
Investing in the cannabis industry carries various potential exposure risks, much like any other investment. The highest level of risk is associated with direct equity investment, where your funds are directly funneled to the operating company. Additionally, if you're an individual investor dealing with a non-cannabis-friendly bank, you face the danger of jeopardizing your banking relationship.
Furthermore, the evolving nature of cannabis legislation adds another layer of risk. Several limited license states have increased the number of licenses, exemplified by Florida and New Jersey, thus diluting the value of the license. This shift facilitates interstate operations and the issuance of additional licenses. As a result, the original license's value is affected, potentially reducing its initial purchase value.
Q: What changes have you seen over the last few years and how have you adapted to the market?
The most significant transformation we've observed over the years pertains to the average cost per pound in the cannabis pricing landscape. At Pelorus, it's crucial for us to grasp the cyclical trends in order to offer informed guidance and ensure our clients' profitability when they seek loans.
States typically undergo a comprehensive lifecycle in cannabis regulation, starting with medical use, and ultimately approving recreational use. Throughout this evolutionary process, Pelorus diligently collects, processes, and analyzes data to gain a deeper understanding of per capita consumption and pricing dynamics. Various factors, including changes in legislation, the state's overall production capacity, weather patterns (especially for outdoor cultivation), and numerous other elements, contribute to the determination of the mean price.
When clients approach us for loans, we leverage the extensive database we've constructed over time, which incorporates hundreds of influencing factors. This database enables us to provide clients with insights into their potential profitability in the dynamic cannabis market.
Q: Could you share any other insights you may have on this rapidly evolving market?
The industry is undergoing rapid evolution, where investments in elements that might not typically be associated with agricultural products now make perfect sense. Companies are increasingly dedicating resources to high-end equipment, such as precision scales, specialized fertilizers, advanced software, LED lighting systems, and air conditioning units, all aimed at enhancing product yield. This is particularly noticeable in states with unlimited licenses, where the competitive landscape is intense. When products are commanding prices of $1,000 to $2,000 per pound, the improved yield significantly bolsters profitability.
The Cannabis & Psychedelics Investment Summit Series showcases the best and brightest cannabis and psychedelic entrepreneurs and is the premiere summit for institutional investors, family offices, and ultra high net worth investors. Request an invitation to attend the upcoming summit taking place November 16, 2023 in NYC, NY www.kahnerglobal.com/request-an-invite. Please email us at info@kahnerglobal.com for speaking and sponsorship opportunities.
