Dive Brief:

• Special-purpose acquisition company (SPAC) Northern Lights Acquisition Corp. will purchase Safe Harbor Financial in a $185 million cash-and-stock deal, the companies announced Monday in a press release.
• Safe Harbor's founder and CEO, Sundie Seefried, will lead the combined organization, which will have an estimated equity value of $327 million after the transaction.
• Safe Harbor, which spun off from Partner Colorado Credit Union (PCCU) in July, launched a commercial cannabis lending platform in late 2021, and now touts a pipeline of more than $300 million from new and existing clients. 

Dive Insight:

The boards of directors and managers of Northern Lights, PCCU and Safe Harbor have unanimously approved the deal, which awaits the green light from Northern Lights stockholders and other customary closing conditions.

Under the agreement, $70 million of the purchase price will come in cash. The other $115 million will comprise shares of Northern Lights stock.

Safe Harbor was established in 2015 as the cannabis banking arm of PCCU. The company has since grown to almost 600 accounts across 20 states. Safe Harbor has processed $11 billion in transactions, with $4 billion of those coming in 2021.

"Over the last seven years, our team has pioneered what many consider to be the industry standard cannabis banking platform by establishing strong internal processes and controls, and by complying with rigorous state and federal banking guidelines," Seefried said in Monday's release. “The acquisition by Northern Lights will allow Safe Harbor to advance its efforts to remain the premier cannabis financial services provider."

Northern Lights' co-CEOs, John Darwin and Joshua Mann, will remain on the board of directors of the combined entity after the transaction closes.

"Setting the gold standard for regulatory compliance, as well as providing access to growth capital across the entire cannabis value chain, Safe Harbor is uniquely positioned to scale," Darwin and Mann said in a statement. "We are confident that our collective experience in the cannabis industry and strong pipeline of lending opportunities are complementary to the incredible business Sundie and her team have established."

Before moving to Safe Harbor in July, Seefried served as CEO of PCCU for 20 years. 

Despite cannabis' legal status in several states, the federal government considers it to be a Schedule 1 drug, a classification that vexes some companies in the cannabis banking space. 

Organizations face stringent requirements established by the Bank Secrecy Act (BSA).

“The amount of work necessary to manage that BSA risk is expensive,” Seefried said in July. “And the resources are demanding, in terms of the monetary system that you have to purchase. 

"We did cannabis and we did it thoroughly," she added. "We think we have the compliance program to a good state of stability here."

Seefried said she intends for Safe Harbor, through the SPAC deal, to expand its suite of financial services.

“Our goal is to become a 'one-stop-shop' for cannabis business financial needs," she said in Monday's release.