Pelorus Equity Group, a provider of commercial real estate loans for the cannabis sector, closed $11.8 million in financing with Juva Life, a life science company with pharmaceutical research and development and consumer-facing operations in cannabis production and distribution.
The primary purpose of the financing, which closed on June 15, is to finance the exercise of the tenants purchase option on its recently completed Stockton, CA cultivation facility, as well as provide working capital and R&D funding. The facility was completed at a cost of $17 million. Juva also plans to use a portion of the funds to further its clinical research development programs on Juva-019 and Juva-041, novel compounds targeting the treatment of inflammation.
“We’re thrilled to fund Juva to acquire its Stockton, California, facility,” Dan Leimel, CEO and manager of the Pelorus Fund at Pelorus Equity Group, said. “In addition to advancing Juva’s research on its two compounds, this compelling transaction will support Juva’s development of products derived from cannabis that offer evidence-based therapeutics for the treatment of many challenging health conditions. As we continue to expand our assets under management, we look forward to continuing to provide leaders in the cannabis ecosystem with flexible capital markets solutions that meet the complex deal structures of large, mid-sized and small operators.”
“I am extremely pleased to close this round of debt financing, especially given the recent distressed capital markets and economic conditions,” Doug Chloupek, CEO and founder at Juva, said. “I believe it is a testament to the excitement around Juva’s cannabis operations as well as our clinical research initiatives. As our cannabis operations continue to grow and generate revenue, it was imperative that we secure our real estate holdings while advancing our pharmaceutical programs. This financing allows us to accomplish both of these goals, while retaining significant equity in our Stockton real estate asset. Additionally, the financing will also provide us with the capital needed to finish construction on our downtown Redwood City retail store which, upon completion, will create a new revenue stream for Juva.”
“As the cannabis industry expands, we are continuing to see significant demand for commercial real estate funding,” Travis Goad, managing partner at Pelorus Equity Group, said. “Over the course of the last year, we have rolled out numerous innovative lending solutions for complex transactions, and in the year ahead, we will look forward to providing our clients in the cannabis sector with more innovative lending solutions and loan programs that enable them to strategically scale their operations and meet their business goals and objectives.”
The financing is secured by the assets of Juva and its subsidiaries, including the real estate held in Stockton. It also includes the issuance of 2.5 million warrants, each convertible into one common share of the company, exercisable at $0.18 CAD per share for a period of three years post loan maturity. The loan bears a variable interest rate of 11.5% plus 1M SOFR (SOFR floor of 1.5%) over the 36-month term of the financing.