By Steve Gelsi
Würk CEO Scott Kenyon said the Denver-based cannabis fintech company is branching out by finding ways to help pot dispensaries and other marijuana companies legally work around federal banking restrictions and other roadblocks facing the industry.
While traditional bank loans and IRS income tax breaks continue to be mostly off limits for cannabis due to the continued federal prohibition of the plant, Würk has teamed up with ETaxbreaks to offer access to the Covid Employee Tax Credit (CERTC), which provides employers a tax credit of up to $33,000 per employee. Most cannabis companies did not realize the credit could be used because it’s based on payroll payments, and not income-based.
“It’s like getting a refund check from the IRS when you don’t expect it,” Würk CEO Kenyon said. “We’re spending more time on finding these types of situations…we have a lot of services coming up.”
Würk, which sells payroll services, tax, compliance and other financial services, said it’s already piloted the program with business clients to make sure it works. It’s now preparing tax credit applications with dozens of companies.
For Würk, the payroll credit amounts to offering a benefit to cannabis companies already saddled with higher taxes and a loftier cost of capital than companies outside of the cannabis space.
Meanwhile, Würk continues to scale up after it closed an oversubscribed $3.5 million Series AA round of financing led by existing investors Poseidon Asset Management, Salveo Capital and The Arcview Group, which followed $22 million raised from seed and Series A rounds.Kenyon said the company plans to finish the year with about 90 employees.
The Cannabis ETF /zigman2/quotes/213173823/composite THCX -2.45% has gained 17% in the year to date, while the AdvisorShares Pure US Cannabis ETF /zigman2/quotes/220307682/composite MSOS -3.20% has fallen 10.7%. The S&P 500 /zigman2/quotes/210599714/realtime SPX -0.11% has gained about 21% in the same time frame.