Abaca, the Arkansas financial technology platform for the cannabis industry, is being acquired by a Colorado financial services provider in a $30 million deal.
Under the merger with SHF Holdings Inc., doing business as Safe Harbor Financial, Abaca will keep all its employees and its home office in downtown North Little Rock, according to Abaca co-founder Dan Roda.
Roda, a cannabis regulations lawyer with commercial lending expertise, will become executive vice president and chief operating officer of Safe Harbor. Abaca co-founder and President Brian Bauer, a fintech expert and venture financing veteran, will be the combined company’s chief revenue officer.
Other top executives of Abaca, including co-founders Greg Ellis and John Foley, will be part of the Safe Harbor hierarchy, as well as payments industry expert Doug Elkins.
“One of the truly exciting things about this pending transaction is how closely aligned Abaca's strategic vision is with Safe Harbor’s,” Roda told Arkansas Business. “There’s an opportunity for everyone at Abaca – those based in Arkansas and those working remotely from across the country – to be a valuable contributor in the combined organization. We expect to keep our office in downtown North Little Rock and to continue to grow our team there.”
The deal will give Safe Harbor access to more than 300 accounts and more relationships with other financial institutions, according to Roda and a news release on the arrangement. It will also give Safe Harbor operations in more than 30 states.
Abaca shareholders will receive $3 million in cash and about $8.4 million in Safe Harbor common stock at closing, then $3 million in cash and $12.6 million in stock a year later. A final $3 million in cash will be due on the deal’s second anniversary. The deal, expected to close this quarter, is subjected to regulatory approval and other customary closing requirements.
Gill Ragon Owen PA of Little Rock is Abaca’s legal adviser; Zack Kobrin, Rick Fucci and Danny Silva of Akerman LLP represent Safe Harbor.
Abaca has processed more than $3 billion in gross transactions since its founding in 2017, and was built on modern cloud-hosting technology by a team of banking and compliance professionals, the news release said. It works with FDIC-insured banks to allow traditional banking services in the highly regulated industry for businesses ranging from single dispensaries to multistate and national operators.
Safe Harbor’s fintech platform will now offer desktop and mobile banking, treasury management, payment processing, cash handling and a new payroll service to launch later this quarter, the release said.
"We are thrilled to announce this agreement to acquire Abaca,” said a statement by Sundie Seefried, Safe Harbor’s founder and CEO. “We have worked with Dan and his impressive team, seeing them successfully scale to become an innovative cannabis fintech leader. With their ecosystem of cannabis banking and finance platform, proprietary technology, strong financial institution and banking relationships, and experienced founder-led management team, we believe Abaca is the ideal platform to help us take a large step forward in scaling our capabilities and service offerings in building the complete cannabis fintech ecosystem.”
Roda said that with its recent listing on NASDAQ and “key additions” to its executive team, Safe Harbor can lead the industry in “compliant financing and banking offerings to the regulated operating U.S. cannabis industry nationwide.”
The news release also quoted Roda’s belief that “joining forces with Safe Harbor enables the Abaca team to better advance our mission of empowering the cannabis community with essential financial services and innovative, affordable solutions.”