David Kivitz,
CEO,
XS Financial

XS Financial is a leasing company that serves the cannabis industry and when CEO David Kivitz started the company, he did so because of the opportunity he saw in what is a growing yet capital-constrained industry.

“The biggest reason that we felt there was an opportunity in this industry is because a lot of traditional capital sources can’t participate until it’s federally legalized,” Kivitz says.

Kivitz gained expertise in the cannabis industry when he started an investment firm in the space. That experience led him to launch XS Financial, but despite having semi-related experience to the equipment finance industry, he knew he needed to bring in real veterans of the game, including Jim Bates as director of credit and Ken Senter as client services director.

“We get an interesting blend of us knowing the cannabis industry well on the management level and them understanding the equipment finance business on a day-to-day level exceptionally well,” Kivitz says. “And the combination of the two has been very powerful.”

Although XS Financial works within the cannabis industry exclusively, it doesn’t just deal in “cannabis equipment,” with Kivitz noting that the company’s customers also require financing for more standard fare, including warehousing equipment, food processing equipment and packaging equipment. Regardless of the equipment needs of its customers, XS Financial emphasizes a tri-party relationship with OEMs and distributors and offers a range of leasing options, including what Kivitz calls equipment lease facilities, which work similar to lines of credit for equipment and capex needs. XS Financial also begins funding the day leases are signed, handles all procurement processes and uses third-party sales and tax experts to structure leases.

The initial opportunity Kivitz saw in the cannabis marketplace has only grown since XS Financial launched and the expectation is that it will continue as more states in the U.S. legalize marijuana. That’s even been the case during the COVID-19 pandemic, although Kivitz still emphasizes the importance of investing in relationships and putting lots of lines in the water to help manage liquidity when a downturn does hit.

For now, XS Financial is laser-focused on retaining its capitalization. In addition, it will build outs its syndication platform, continue ingraining itself in the traditional equipment finance community and, eventually, consider expanding to other industries beyond cannabis when the right opportunities arise.

“Our objective is not to be the biggest company,” Kivitz says. “Our objective is to be a well-run profitable company, and if we end up getting big as a result, terrific. But it’s really about doing things the right way.”