New CEO of Safe Harbor sets ambitious growth agenda: "Growth is our main focus"
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Safe Harbor Financial, a fintech company specialising in banking, credit unions, and cannabis industry businesses, has been growing its presence in the cannabis sector. The company, led by new CEO Terry Mendez, has been actively participating in industry events and forming strategic partnerships to offer compliant and commercially viable financial services.
This month, Safe Harbor announced referral agreements with Würk and FundCanna, extending its network of cannabis-friendly financial institutions. Terry Mendez, the new CEO, is focusing on marketing and sales efforts to increase awareness and grow the customer base of Safe Harbor Financial.
The company has also been expanding its product offerings. In addition to its small-business line of credit program, Safe Harbor has originated debt and credit facilities for cannabis companies. It has processed about $25 billion in deposit transactions for cannabis-related businesses in 41 states and U.S. territories.
However, Safe Harbor faces challenges in scaling its financial products due to the regulatory complexities and banking restrictions in the cannabis industry. The industry's legal ambiguity and federal regulatory hurdles limit access to traditional banking and payment networks, requiring fintech companies like Safe Harbor to maintain stringent compliance and risk mitigation programs.
Safe Harbor's 2024 expenses were reduced by about 42% compared to the prior year, but still came in at $22.3 million due to higher legal fees related to litigation connected to its 2022 acquisition of Abaca. The company flagged "material weaknesses" in its internal controls over financial reporting for 2024 and 2023. Operating losses and uncertainty surrounding cash flows have raised "substantial doubt about the Company's ability to continue as a going concern" for at least the next year.
Despite these challenges, Safe Harbor is considering purchasing licensing rights and planning to make investments in its core platform to increase automation. The company recently hired a senior vice president of marketing and a vice president of business development to support its growth initiatives.
Safe Harbor has also been working to improve its financial position. It spent about $3 million paying down a note in 2024 and modified its debt with PCCU, freeing up $6 million for investment. The company has about $2 million in working capital.
Safe Harbor was spun out in 2021 and taken public in 2022 by a special-purpose acquisition company. However, its loss increased almost threefold last year, to $48.3 million. This increase in loss, combined with the financial constraints and regulatory challenges, could limit Safe Harbor's capacity to aggressively invest in marketing and sales expansion.
Despite these challenges, Safe Harbor remains committed to working with more financial institutions and hopes to have 20 to 25 institutions on its platform in three years. The company aims to continue offering tailored financial solutions to the cannabis industry, helping businesses navigate the complex regulatory landscape and access the capital they need to grow and thrive.
[1] Marijuana Business Daily. (2023). Safe Harbor Financial Q1 2023 earnings: Revenue falls 13%, net loss widens. Retrieved from https://mjbizdaily.com/safe-harbor-financial-q1-2023-earnings-revenue-falls-13-net-loss-widens/
[2] Green Market Report. (2023). Safe Harbor Financial Q4 2022 Earnings: Loss Increases Threefold to $48.3 Million. Retrieved from https://greenmarketreport.com/safe-harbor-financial-q4-2022-earnings-loss-increases-threefold-to-48-3-million/
[3] New Cannabis Ventures. (2023). Safe Harbor Financial Announces Referral Agreements with Würk and FundCanna. Retrieved from https://newcannabisventures.com/safe-harbor-financial-announces-referral-agreements-with-wurk-and-fundcanna/
[4] Green Market Report. (2023). Safe Harbor Financial CEO Terry Mendez Discusses the Company's Strategy and Growth Plans. Retrieved from https://greenmarketreport.com/safe-harbor-financial-ceo-terry-mendez-discusses-the-companys-strategy-and-growth-plans/
[5] Marijuana Business Daily. (2023). Safe Harbor Financial Q4 2022 Earnings: Revenue Falls 13%, Net Loss Widens. Retrieved from https://mjbizdaily.com/safe-harbor-financial-q1-2023-earnings-revenue-falls-13-net-loss-widens/
- Safe Harbor Financial, being active in the fintech industry, aims to increase its business by partnering with financial institutions and offering tailored financial solutions to the cannabis industry, while navigating the complex regulatory landscape.
- To support its growth initiatives, Safe Harbor Financial has been investing in automation, hiring key personnel, and improving its financial position, despite facing challenges in scaling its financial products due to regulatory complexities and banking restrictions in the cannabis industry.
