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(Bloomberg) — LeafLink, a wholesale marketplace for cannabis, closed a $250 million credit facility, marking one of the largest debt deals to date as the nascent marijuana industry ventures into the world of credit.

Marijuana stocks rode highs from late 2017 to 2018, as investors sought to enter the budding business that was emerging from prohibition as states relaxed their laws. But the market tumbled over the past year as that optimism faded amid challenges that include a patchwork of state regulations and no access to traditional banking services. This has left the industry, which can’t sell bonds or tap bank loans, starved for access to liquidity.

Doug Gordon, head of LeafLink Financial, said in a phone interview that the deal is the first to introduce liquidity to the broader market. New York-based LeafLink operates a marketplace for marijuana retailers to buy cannabis products. It already provides some factoring, or trade credit, to facilitate transactions in some areas of the U.S.

“To date, most of the smaller operators haven’t been privy to any debt capital,” said Gordon, who also serves as executive vice president for the parent LeafLink. “This is the first product that has the ability to inject a large amount of liquidity to serve the industry at large.”

The credit facility, granted to the company’s finance division, shows how cannabis debt deals are structured creatively. The loan, which is from an undisclosed private commercial lender, will be used to expand factoring in areas where it operates, Gordon said.

He estimates that LeafLink currently facilitates transactions by buying more than $100 million in accounts receivable per year. The deal will allow LeafLink to expand access to financing across its marketplace, which sees more than $2.8 billion of transactions per year. That represents an estimated 30% of all US wholesale cannabis, according to the company.

LeafLink, which is privately held, declined to disclose other details of the debt facility, citing the agreement’s terms. Lenders have entered the industry with caution, since cannabis technically remains illegal under U.S. federal law.

Cresco Labs Inc. in January announced a loan of up to $200 million from undisclosed lenders, while Acreage Holdings Inc. said it secured $100 million from an undisclosed institutional lender in February.

Viridian Capital Advisors, a financial advisory firm specializing in cannabis companies, says the first two quarters of 2020 saw the industry raise around $825 million in debt. While that’s still less than the $1.7 billion of equity raised, the dynamic between equity and debt in the industry has been shifting, with debt representing a growing amount.

(Adds analysis of debt trends in cannabis industry in final paragraph.)

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