Safe Harbor CEO aims to pivot from cannabis lending to fintech

Terry Mendez is implementing sweeping changes at Safe Harbor Financial to diversify its core business and improve its standing as a publicly traded company.

The newly appointed CEO, who took over in February after the retirement of Sundie Seefried, wants to transform the business, expanding services for the debanked to exploring lending opportunities outside the cannabis industry.

His plan to win over shareholders will leverage the financial services firm’s legacy – facilitating more than $25 billion in cannabis-related funds through partner banks – with data gleamed from its business and vast network of clients, lenders and marijuana operators.

“We’re not capitalizing on that data,” said Mendez, who wants to explore opportunities in crypto and the gaming industry as well as with ancillary cannabis companies.

“There’s other debanked industries that we can potentially move into.”

To execute that strategy and provide more financial flexibility, Safe Harbor modified its debt with Partner Colorado Credit Union a few weeks ago, freeing up $6 million in cash.

In a move to maintain a $1 share price minimum requirement on the Nasdaq exchange, where it trades as SHFS, the Colorado-based company initiated a reverse stock split. Safe Harbor’s board “overwhelmingly approved” the reverse stock split, the CEO said.

Mendez issued a letter to shareholders on March 11 outlining his vision to boost financial services for cannabis businesses, strengthen Safe Harbor’s balance sheet and drive long-term value for shareholders.

Later that day, the former cannabis company executive and Deloitte & Touche alum spoke with MJBizDaily about a wide range of issues, including investor pressures, evolving into fintech and overseeing a corporate overhaul.

What are your immediate priorities?

We started the process of renegotiating Day 1 with partner Colorado Credit Union to free up or unlock some funds.

They deferred two months of a principal payment. Most of our free cash flow that we generate goes to service that note.

We also looked internally, and we did a mini-modification of our organization, unlocking another couple of million dollars for the next two years.

We got rid of things we didn’t need or restructured how people and process work.

We don’t have marketing dialed in the way it should be dialed in.

So, we’re fixing the sales force, fixing marketing – and that will help establish and broaden our region, our core business – and adding additional financial institutions to our core business.

How do you look at the cannabis lending space today?

Lending has become much more difficult.

It requires that the borrower provide a lot more information than they’re used to providing, including regular financial reports, regular cash flow updates, regular things that most single state operators and smaller multistate operators don’t have.

It’s going to be a higher standard than it was a few years ago, because the risk tolerances have shifted with higher inflation and higher interest rates.

What did you want to convey to investors at the recent shareholder meeting?

We’re a different company today.

We were built as a compliance company … but we have a different non-banking thought process here.

We’re operator-led. And I’m hiring people that know the cannabis industry well.

We’re going to bring in a team of people that really understand your business and really want to work with you to help you be successful.

I want people to understand that our initial thoughts, our initial strategy, is just that – an initial strategy.

There are dozens of opportunities. I picked what I thought was best for Safe Harbor.

We’re open to working with all financial institutions.

Can you discuss the reverse stock split and potential benefits?

Our stock, in order to be compliant with Nasdaq listing rules, has to trade over $1, so the reverse stock split is a necessary evil in order to get us to maintain our listing on the Nasdaq.

The stock split really changes the par value of the share price, and it changes very little else in terms of your equity valuation.

What’s your view of being a publicly traded company in this space, given investor sentiment? Is going private a potential option?

I talked to our board about the idea of listing on a different exchange, like maybe an OTC or even going private.

Both are not the right time for us at this moment.

If we can implement the strategy that I put forth, we will have access to equity, and we will have access to options that we wouldn’t otherwise have if we delist to another exchange or become private.

Many of our colleagues are trading on the OTCs, and because they’re trading on the OTCs, they can’t be picked up by major mutual fund companies and custodianships and 401(k)s and other places where you want to be.

We don’t have a large following, but a portion of our stock is held in Vanguard funds.

There’s options for liquidity maintaining the Nasdaq listing and also options for us from a lending perspective.

What is your outlook for the cannabis industry for 2025?

For the U.S. perspective, I’m optimistic.

We didn’t get what we wanted in the last (presidential) administration.

We’re not likely to get what we want from this particular administration, but there are things that might go our way.

If we are descheduled, we’d pick up a half a million or plus employees from a job-growth perspective.

If we are able to pass the STATES Act, that would change some of the dynamics of the industry.

This interview has been edited for length and clarity.

Chris Casacchia can be reached at chris.casacchia@mjbizdaily.com.