KushCo Holdings Inc., a supplier of cannabis packaging products, is starting to create believers on Wall Street.
The Garden Grove-based company (OTC: KSHB), which is the largest cannabis-related OC company with a $322 million market cap, received a $50 million commitment from Monroe Capital LLC.
The funds will be allocated to KushCo in a $35 million revolving line of credit with $15 million being set aside and available subject to compliance and borrowing base availability.
The investment is a first of its kind for the cannabis industry and will provide necessary support to KushCo’s expansion of its retail services division and distribution into the CBD market space, KushCo Chief Executive Nick Kovacevich said in an email.
“It’s a huge deal considering blue chip debt funds haven’t participated in the cannabis sector until now,” Kovacevich told the Business Journal.
Kushco is expected to triple its revenue to $147.7 million, according to the average estimate of eight analysts.
“We’re excited to enter this hyper-growth industry with the company,” Monroe Capital Chief Executive Ted Koenig said in a statement. “They are a best in class business in a unique position to take advantage of opportunities in this emerging business sector.”
2nd Investment
It’s the second recent Wall Street investment for the over-the-counter stock.
Earlier this year, the Business Journal reported that KushCo received a $21.3 million investment from New York-based Hudson Bay Capital Management LP. Last month, KushCo filed a request to uplist to the Nasdaq.
Chicago-based Monroe Capital was founded in 2004 to provide private credit solutions to the U.S. and Canada, according to its website.
A section of its site is designated for cannabis-based investments, which are available in amounts ranging from $8 million to $100 million. The criteria an interested cannabis company must meet to become funded is rather strict: they must be “non-leaf touching.”
Monroe has also invested in another Orange County-based company, lending up to $55 million in Incipio Group, an Irvine-based supplier of protective cases for cellphones.
Its founder, Andy Fathollahi, is also entering the cannabis industry with a separate company called Kanvas Co. to supply products to the cannabis industry. The new company was profiled in the Aug. 19 edition of the Business Journal.
