Vancouver-based Community Savings has provided more than $20 million in loans to licensed businesses in Canada's legal cannabis sector, CEO Mike Schilling told BIV yesterday.
His credit union also recently passed the $5-million threshold in money provided through a factoring program that enables cannabis ventures to get paid by governments faster, he added.
Few financial institutions provide loans to Canadian cannabis companies despite the federal government making cannabis legal for adult use nearly six years ago.
B.C.'s largest credit union, Vancity, does not provide those loans, a representative told BIV yesterday. Big banks do not provide those loans either.
Groupe SGF last year launched a class-action lawsuit against Desjardins Federation, National Bank, Royal Bank, Bank of Montreal, TD Bank, and CIBC for discriminating against actors in the sector.
Community Savings started providing financing to cannabis companies in the early years of cannabis legalization, when it was known as CCEC Credit Union and had a single location on Commercial Drive. In 2022, it merged with Community Savings Credit Union and while the institution was said to be based in Surrey, Schilling said he considers the merged venture that has seven locations to be based on Commercial Drive. There is no stand-alone head office.
Arms of provincial governments, such as in Ontario and B.C., buy all legal cannabis meant for retail sales to adults in those provinces. The governments resell the products to licensed retailers. Bureaucrats then tell the producers that there could be a 60-day window before they are paid, Schilling said.
Instead of enduring that long wait, Community Savings offers those businesses the option to sell their accounts-receivable invoices to the credit union. The credit union immediately provides between 75 per cent and 82.5 per cent of the money owed. It then provides the cannabis company with the remainder of the money owed when the government pays Community Savings. The credit union charges a fee of about two per cent per month for the money that it advances to the businesses, Schilling explained. That means that if it takes the government two months to pay Community Savings, the credit union's fee to the cannabis business would be four per cent.
Community Savings is offering the program in partnership with We Can Capital Inc., Schilling said.
"They are effectively administering the program for us," he added.
He estimated that the program has facilitated about $5.3 million in advance payments to cannabis companies since the program launched in February.
"Woody Nelson was one of the companies we chose to be part of the pilot and they have effectively doubled the output of their business," Schilling said.
Tricanna Industries Inc. is another company that has taken part, Schilling said.
Another initiative in February was Community Savings launching pre-approved business credit cards for its members who operate cannabis-related businesses. Those cards had previously been only available to other business clients.
Schilling last year went on a trip to Ottawa with the Canadian Cannabis Council to lobby the government to make changes to legislation to help the cannabis sector. One of his proposed changes was to change the way excise taxes are levied.
He told BIV at the time that he felt that it was his duty to advocate for changes that would help his institution's members.
His talk with BIV yesterday came not long after U.S. presidential candidate Donald Trump said he would support a ballot measure in Florida to legalize cannabis sales for adults. This prompted a spike in many cannabis-sector stocks.
"There's not much that I agree with Donald Trump," he said. "But I think on this one, he's got it."
