MariMed Inc. Secures $58.7 Million Loan from Needham Bank to Bolster Operations and Reduce Debt

LOS ANGELES- MariMed Inc. a player in the cannabis industry, has recently finalized a substantial financial deal with Needham Bank, a community bank based in Massachusetts. The agreement involves a 10-year $58.7 million loan, marking a significant move in the company’s financial strategy.

The primary objective of this loan is to refinance existing debts and potentially acquire new assets. MariMed has expressed its intention to allocate any remaining funds towards the expansion of its cultivation facility in Maryland. Should there be surplus capital following this project, the plan is to return the unused portion to MariMed.

A crucial aspect of this financial arrangement is the interest rate structure. For the initial five-year period, the loan carries an interest rate of 8.43%. Post this period, the rate will shift to one pegged to the Federal Home Loan Bank of Boston’s rates, with an added 3.50%. The early stages of repayment will focus on interest-only payments for the first year, transitioning to a 20-year amortization schedule thereafter.

Jon Levine, the CEO of MariMed, highlighted the strategic importance of this loan. He emphasized the anticipated cash savings resulting from securing a lower interest rate amidst a climate of generally rising rates. Levine’s statement underscored the absence of any dilutive equity components in the deal, a factor likely to be well-received by shareholders.

The loan, categorized as a construction-to-permanent-commercial real estate mortgage, is secured against MariMed’s assets located in Maryland and Massachusetts. Levine projected substantial savings in principal and interest payments – approximately $4.7 million in the first year and $3.5 million annually for the subsequent four years. These savings are expected to enhance the company’s cash flow, potentially paving the way for more mergers and acquisitions.

This financial maneuver also allowed MariMed to release liens on its operational assets across Illinois, Ohio, and Delaware, along with its branded products. This development could facilitate future term loans at favorable rates.

The timing of this deal is significant, given the current trend of rising interest rates, particularly for cannabis companies that are federally regulated. Needham Bank, the lending institution in this deal, is reportedly considering an initial public offering with an aim to raise $390 million, according to the Needham Observer. The bank has hinted at a potential future sale or merger.

Concluding his statement, Levine noted the enhanced financial health of MariMed post this deal. He pointed out the low debt/EBITDA ratio of 2.5X resulting from the new loan, a metric that places MariMed among the most financially stable entities in the cannabis sector and underscores its strong operational cash flow capabilities.