The Blank Rome team is thrilled as we gear up for the Eighth Annual State of the Cannabis Industry Conference!
We are looking forward to welcoming experts and industry leaders from across the country who will offer their unique strategic insights, experiences, and expertise on the cannabis industry.
In anticipation of the conference, we will be featuring interviews with several of our panelists. These conversations will provide a glimpse into their diverse backgrounds and perspectives, and give our readers and conference attendees a preview of the compelling topics we will be showcasing at the conference.
For our first interview, we sat down with Patrick Kim, co-founder and managing director of a leading provider of capital to the cannabis industry, Altmore Capital. Prior to founding Altmore Capital, Patrick was a partner at the Williams & Connolly law firm in Washington, D.C. At Williams & Connolly, Patrick represented a variety of major financial institutions and investment funds, including several top-tier private equity firms, in a range of commercial litigation matters and government investigations. Patrick offers a unique perspective on financing within the cannabis industry due to his legal background.
- Can you describe Altmore Capital’s role in the cannabis industry and your responsibilities within the company?
We are a private credit lender in the U.S. cannabis industry, investing in plant-touching U.S. operators. We’ve made over $350 million of investments in the industry through over 25 different investments since 2018. I’m a founder of Altmore Capital and primarily responsible for capital side.
- What types of businesses does Altmore target for investment, and what are the common characteristics of businesses to which Altmore provides capital?
Cultivators, processors/manufacturers, distributors, and dispensaries. We don’t invest in startups or distressed, but look for middle-market operators that have between $20 and $250 million of revenue, multiple facilities, and, most importantly, are profitable and cash flow positive, or have a very short path to get there.
- What are some subtle “red flags” that might deter you or your team from investing in a potential opportunity?
Over the years we’ve compiled a list of red and yellow flags that we investigate if we run across them in due diligence. One example is a significant portion of revenue from dispensaries on state borders, which potentially raises both business and compliance issues. Another is an unduly complicated org chart.
- What changes have you observed in the cannabis industry since you began investing?
There have been a lot of fads over the years, since we’ve been investing. From ancillary / picks & shovels investing to ex-U.S., to Multi State Operators, to Canadian IPOs, to vertical integration and, now, to horizontal integration and on and on. The one thing that has been constant is that the best move is to go back to Finance 101 and run the business efficiently, leanly, and profitably, and don’t overpay for assets!
- What important lessons have you learned as an investor in the cannabis industry, and how have those lessons impacted your team’s current strategy?
Again, despite the newness and novelty and fast growth of the industry, business fundamentals still matter the most. We try to look at U.S. cannabis operators through the same lens as any other private credit investor investing in a non-cannabis industry. Same discipline.
Register now for Blank Rome’s 8th Annual State of the Cannabis Industry Conference!
Join us in person or via live stream on October 21, 2024. RSVP here: bit.ly/3AJprRA