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Cannabis Bank Safe Harbor to Go Public via SPAC Merger
February 14, 2022 at 7:33 am
Published by NCV Newswire
Northern Lights Acquisition Corp. Announces Entering into a Business Combination Agreement with Safe Harbor Financial, the Leading Provider of Financial Services and Access to Banking Solutions for the U.S. Cannabis Industry
Transaction advances Safe Harbor’s mission to be the leading provider of compliant and reliable access to banking and financing solutions for the U.S. cannabis industry
One of the first cannabis-focused commercial lending platforms with an actionable pipeline of over $300 million in near term opportunities with proven multi-state and single-state operators
Tenured management team led by banking and cannabis industry pioneer, Founder and CEO Sundie Seefried
Estimated post-transaction equity value of the post-closing company will be $327 million with a fully committed $60 million PIPE from leading institutional investors
NEW YORK and ARVADA, Colo., Feb. 14, 2022 /PRNewswire/ — Northern Lights Acquisition Corp. (NASDAQ: “NLIT”) (“Northern Lights”), a special purpose acquisition corporation and SHF, LLC dba Safe Harbor Financial (“Safe Harbor” or the “Company”), the leading cannabis-focused financial services provider offering reliable access to banking and financing solutions for the cannabis industry, announced today the signing of a definitive business combination agreement that will result in Northern Lights’ acquisition of Safe Harbor from a subsidiary of Partner Colorado Credit Union, a Colorado-chartered credit union based in Arvada, Colorado (“PCCU”). Upon the closing of the transaction, Northern Lights and Safe Harbor will be led by Sundie Seefried, Founder and Chief Executive Officer of Safe Harbor. The boards of directors and managers of Northern Lights, PCCU, and Safe Harbor have unanimously approved the proposed business combination.
Established in 2015 by PCCU, Safe Harbor was formed to provide an unmet need – compliant access to banking and financial services for the rapidly growing U.S. cannabis industry. Over the past seven years, Safe Harbor has grown to nearly 600 accounts spanning 20 states. Additionally, Safe Harbor has processed over $11 billion in transactions with $4 billion in 2021 and has grown deposits at a 73% CAGR since inception. As legislative reform unfolds in the U.S., Safe Harbor’s platform is uniquely positioned to continue as the trusted, leading standard for cannabis financial services.
The regulated U.S. cannabis market currently consists of more than 70,000 cannabis-related businesses (“CRBs”), with sales that are expected to double to over $46 billion by 2025. Despite this rapid growth, there remains limited access to reliable cannabis financing and banking solutions caused by conflicting state and federal laws, unclear banking guidelines, and a lack of “safe harbor policy” for financial institutions. These dynamics have weighed heavily on cannabis-related companies, which currently operate without effective cash management solutions or traditional commercial financing options.
Safe Harbor addresses these challenges with its industry-leading financial services and commercial lending platform, providing its clients with increased safety and security through access to normalized banking and cash management. Through its proprietary risk management and compliance program, Safe Harbor operates under regulations promulgated under the Bank Secrecy Act (“BSA”) and additional FinCEN guidance, as demonstrated by passing 15 state and federal examinations since inception.
To help cannabis operators overcome their historic reliance on expensive, non-traditional forms of capital, Safe Harbor launched one of the first commercial cannabis lending platforms in late 2021. Since initiating the program, Safe Harbor has an actionable pipeline of over $300 million from both its existing and new clients. With its low cost of capital advantage, underpinned by industry-leading compliance and underwriting, Safe Harbor offers competitive rates with flexible structure and collateral packages ushering in a new wave of commercial capital for the cannabis industry.
Management Comments
“Safe Harbor is the most compelling investment opportunity we have encountered in the cannabis industry as both operators and investors. Safe Harbor is one of the only multi-state financial service organizations to successfully navigate the highly regulated cannabis banking industry, providing services that operators in other industries take for granted,” noted John Darwin and Joshua Mann, Co-CEOs of Northern Lights, both of whom will remain on Northern Lights’ Board of Directors upon completion of the transaction. “Setting the gold standard for regulatory compliance, as well as providing access to growth capital across the entire cannabis value chain, Safe Harbor is uniquely positioned to scale. We are confident that our collective experience in the cannabis industry and strong pipeline of lending opportunities are complementary to the incredible business Sundie and her team have established.”
The acquisition by Northern Lights will allow Safe Harbor to advance its efforts to remain the premier cannabis financial services provider. Over the last seven years, our team has pioneered what many consider to be the industry standard cannabis banking platform by establishing strong internal processes and controls, and by complying with rigorous state and federal banking guidelines.
Sundie Seefried, Chief Executive Officer of Safe Harbor
Through the SPAC transaction, we believe Safe Harbor will be well-positioned to expand its suite of financial services for our existing and new clients and continue to support the growth of the cannabis industry at a very high level. Our goal is to become a ‘one-stop-shop’ for cannabis business financial needs.
Transaction Overview
Northern Lights will acquire Safe Harbor, a subsidiary of PCCU for a total of $185 million, of which $70 million will be paid in cash and $115 million in shares of Northern Lights Class A common stock. The estimated post-transaction equity value of the Company will be approximately $327 million, assuming no redemptions by the stockholders of Northern Lights. The transaction will provide up to $107 million of gross proceeds (assuming no redemptions), including $117 million from Northern Lights’ cash-in-trust and a fully committed $60 million PIPE from institutional investors.
The transaction is subject to approval by the stockholders of Northern Lights and other customary closing conditions. Additional information about the proposed transaction, including a copy of the business combination agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Northern Lights with the Securities and Exchange Commission, and will be available at www.sec.gov.
About Safe Harbor Financial
Safe Harbor is one of the first financial services providers to offer reliable access to banking solutions for cannabis, hemp, CBD, and ancillary operators, making communities safer, driving growth in local economies, and fostering long-term partnerships. Safe Harbor, through its partners, serves the regulated cannabis industry and implements the highest standard of accountability, transparency, monitoring, reporting, and risk mitigation measures while meeting BSA obligations in line with FinCEN guidance on CRBs. Over the past seven years, Safe Harbor has processed over $11 billion in transactions with operations spanning 20 states with regulated cannabis markets. For more information, visit www.shfinancial.org.
About Northern Lights Acquisition Corp.
Northern Lights is a blank check company formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. For more information, visit northernlightsacquisitioncorp.com
About NLIT Sponsor
The Sponsor is an affiliate of Luminous Capital Inc. (“Luminous”), a U.S. and Canadian-based private equity firm with a team of industry experts that have managed operations from concept to public company exit, raised and deployed institutional capital, and held board seats on multiple private and public cannabis companies. For more information, visit www.luminouscapitalinc.com.
Advisors
EF Hutton, division of Benchmark Investments, LLC, is serving as placement agent and capital markets adviser. Nelson Mullins Riley & Scarborough LLP is serving as legal advisor to Northern Lights. Donald T. Emmi, Esq. and David Waller, Esq. are serving as legal advisors to Safe Harbor and PCCU. KCSA Strategic Communications is serving as public relations and investor relations advisor.
