A Burlington Consultant Helps Cannabis Companies Grow
Long before Tripp Murray ever set foot inside a legal cannabis cultivation facility, he knew what it took to grow a small startup company into a thriving business: seed money.
For 17 years, the New York native worked in the traditional world of investment banking, eventually becoming director of the U.S. equity capital markets for a major French bank. Then, a few years ago, a friend asked Murray to review a business plan for a potential investment opportunity in an industry with which neither had any previous experience.
Though the commodity — marijuana — was unusual, the business fundamentals were not. Besides investors, all startups need guidance from someone who understands banking, balance sheets, cash flows, and the complexities of tax and regulatory policies.
So Murray met with the Colorado-based operator and a lawyer who had been involved in writing the laws that now govern Denver’s adult-use cannabis market. Soon the financier was an informal member of the “cannabis club,” spending every third week meeting with pot producers in the Denver area, touring facilities, building relationships and providing financial advice on behalf of his then-employer, Medallion Financial Group.
That firm, whose slogan is “In niches there are riches,” got its start by financing taxi medallions, or licenses. With cannabis, Medallion Financial was looking to invest not just thousands but millions of dollars in what it saw as a major growth industry. The legal market is projected to expand from $4.6 billion in 2014 to $21.8 billion by 2020 — a 30 percent annual growth rate — so the financiers saw plenty of green to be made in this rich niche.
“It’s a very entrepreneurial business,” Murray says. “There are a few very large players in Colorado, but the majority of them are smaller entrepreneurs.”
Illustration: Marc Nadel