Safe Harbor CEO aims to pivot from cannabis lending to fintech

Terry Mendez is implementing sweeping adjustments at Secure Harbor Monetary to diversify its core enterprise and enhance its standing as a publicly traded firm.

The newly appointed CEO, who took over in February after the retirement of Sundie Seefried, desires to remodel the enterprise, increasing providers for the debanked to exploring lending alternatives exterior the hashish business.

His plan to win over shareholders will leverage the monetary providers agency’s legacy – facilitating greater than $25 billion in cannabis-related funds via associate banks – with information gleamed from its enterprise and huge community of shoppers, lenders and marijuana operators.

“We’re not capitalizing on that information,” mentioned Mendez, who desires to discover alternatives in crypto and the gaming business in addition to with ancillary hashish firms.

“There’s different debanked industries that we will probably transfer into.”

To execute that technique and supply extra monetary flexibility, Secure Harbor modified its debt with Companion Colorado Credit score Union just a few weeks in the past, releasing up $6 million in money.

In a transfer to take care of a $1 share value minimal requirement on the Nasdaq trade, the place it trades as SHFS, the Colorado-based firm initiated a reverse inventory cut up. Secure Harbor’s board “overwhelmingly authorised” the reverse inventory cut up, the CEO mentioned.

Mendez issued a letter to shareholders on March 11 outlining his imaginative and prescient to spice up monetary providers for hashish companies, strengthen Secure Harbor’s stability sheet and drive long-term worth for shareholders.

Later that day, the previous hashish firm government and Deloitte & Touche alum spoke with MJBizDaily about a variety of points, together with investor pressures, evolving into fintech and overseeing a company overhaul.

What are your speedy priorities?

We began the method of renegotiating Day 1 with associate Colorado Credit score Union to unlock or unlock some funds.

They deferred two months of a principal cost. Most of our free money circulate that we generate goes to service that notice.

We additionally regarded internally, and we did a mini-modification of our group, unlocking one other couple of million {dollars} for the subsequent two years.

We removed issues we didn’t want or restructured how individuals and course of work.

We don’t have advertising dialed in the way in which it must be dialed in.

So, we’re fixing the gross sales drive, fixing advertising – and that can assist set up and broaden our area, our core enterprise – and including extra monetary establishments to our core enterprise.

How do you have a look at the hashish lending house right now?

Lending has change into way more troublesome.

It requires that the borrower present much more info than they’re used to offering, together with common monetary experiences, common money circulate updates, common issues that almost all single state operators and smaller multistate operators don’t have.

It’s going to be a better customary than it was just a few years in the past, as a result of the danger tolerances have shifted with greater inflation and better rates of interest.

What did you need to convey to traders on the latest shareholder assembly?

We’re a distinct firm right now.

We had been constructed as a compliance firm … however now we have a distinct non-banking thought course of right here.

We’re operator-led. And I’m hiring folks that know the hashish business properly.

We’re going to usher in a crew of individuals that actually perceive your online business and actually need to work with you that will help you achieve success.

I would like individuals to know that our preliminary ideas, our preliminary technique, is simply that – an preliminary technique.

There are dozens of alternatives. I picked what I assumed was finest for Secure Harbor.

We’re open to working with all monetary establishments.

Are you able to focus on the reverse inventory cut up and potential advantages?

Our inventory, so as to be compliant with Nasdaq itemizing guidelines, has to commerce over $1, so the reverse inventory cut up is a needed evil so as to get us to take care of our itemizing on the Nasdaq.

The inventory cut up actually adjustments the par worth of the share value, and it adjustments little or no else by way of your fairness valuation.

What’s your view of being a publicly traded firm on this house, given investor sentiment? Goes personal a possible choice?

I talked to our board in regards to the thought of itemizing on a distinct trade, like possibly an OTC and even going personal.

Each will not be the fitting time for us at this second.

If we will implement the technique that I put forth, we can have entry to fairness, and we can have entry to choices that we wouldn’t in any other case have if we delist to a different trade or change into personal.

A lot of our colleagues are buying and selling on the OTCs, and since they’re buying and selling on the OTCs, they’ll’t be picked up by main mutual fund firms and custodianships and 401(ok)s and different locations the place you need to be.

We don’t have a big following, however a portion of our inventory is held in Vanguard funds.

There’s choices for liquidity sustaining the Nasdaq itemizing and likewise choices for us from a lending perspective.

What’s your outlook for the hashish business for 2025?

For the U.S. perspective, I’m optimistic.

We didn’t get what we needed within the final (presidential) administration.

We’re not more likely to get what we would like from this explicit administration, however there are issues which may go our means.

If we’re descheduled, we’d decide up a half 1,000,000 or plus workers from a job-growth perspective.

If we’re in a position to move the STATES Act, that might change a few of the dynamics of the business.

This interview has been edited for size and readability.

Chris Casacchia may be reached at chris.casacchia@mjbizdaily.com.