” What we’ve done is try to create an atmosphere where we love coming there every day, and I think our people do, as well.
GCV: Have you struggled with a banking relationship in the past?
Leonowicz: We’ve definitely struggled. At the firm I was at before I came to Redbud, the biggest portion of its practice was banking, specifically credit unions in Michigan. So, when I transitioned to Redbud full-time I thought, ‘If anyone’s got a leg up in the banking world it’s clearly me. I know all the players, I know what they’re doing.’
Even with that, I struggled to find a house that we could actually utilize for Redbud. There wasn’t anybody doing it. Small credit unions have said, ‘This isn’t the industry we thought you guys were in. You have to go elsewhere.’ All the way up to the TCF’s of the world and those institutions that are saying, ‘Listen, we love what you’re doing, but we just can’t be affiliated with a cannabis company.’
” We love what you’re doing, but we just can’t be affiliated with a cannabis company.
It was challenging, and it was tough to find a banking partner that didn’t gouge you in terms of pricing. So, we were very lucky and very happy to find our current credit union, and we’ll continue to work with them for the foreseeable future because they were there from the beginning. They were there for us when nobody else was. That really went a long way for us, and I think that’s why we enjoy working with them.
GCV: You mentioned that you had some banking partners, but that they didn’t last too long. What was the biggest struggle there?
Leonowicz: I would say the uncertainty of it all was a big struggle, not knowing when our account was going to be closed and when we’d be asked to shift. We were constantly worried about the interruption our business that a closed bank account would create.
I think it’s one of those portions of a business that is so often overlooked because it’s so simple and streamlined for most ordinary businesses, but it’s one of the biggest challenges that cannabis companies face, especially out of the gate.
” I think it’s one of those portions of a business that is so often overlooked because it’s so simple and streamlined for most ordinary businesses, but it’s one of the biggest challenges that cannabis companies face, especially out of the gate.
GCV: What else would you tell people about what it’s like being a cannabis entrepreneur?
Leonowicz: I would say that the regulatory challenges that you face day-to-day just being a cannabis company are extreme. Every single thing that you touch or do – because of the fact that you’re cannabis – is challenging. Things such as your payroll; ‘How do I get my employees paid through a standardized payroll company?’ There’s not a lot out there that will work with cannabis companies. Construction, too; it’s hard to find a construction loan or bonds or someone that will just do business with you because they’re scared of the blowback to their financial institution.
If I had to send a message to financial institutions, it’s more of an awareness to say, ‘Every single thing that we touch and do is difficult already. So, for a financial institution that’s seeking to gain more cannabis businesses, the fact that you can make the process easier and a little more streamlined and with great communication, that’s really going to be attractive for large-scale operators such as Redbud Roots.’ If you can make our lives a little bit easier, especially when everything else is so difficult, that will go a really long way with a company like ours.
” If you can make our lives a little bit easier, especially when everything else is so difficult, that will go a really long way with a company like ours.
GCV: Do you think it’s important for a financial institution to understand how cannabis businesses operate?
Leonowicz: Yes. A lot of institutions now come out to your facility and meet you in person, which I always thought was probably the smartest and the best thing they could do. Most people think it’s just a bunch of guys sitting around smoking weed with some lights hung up, and then when you walk in you’re like, ‘Woah, this is a totally different operation than I was anticipating.’ Understanding the business itself and the intricacies that go into it, albeit licensing or operations or cash flow, really getting your hands in the dirt with it all, I think it would be great for financial institutions to understand how this new industry or business works and operates. Then you can start to cater your services appropriately, understand where gaps are, and really get to that endpoint where you’re making folks lives a little bit easier because you understand how they work. I think it’s just good business.