Viridian Experts Talk Recent Cannabis Industry Deals: M&A, Capital Raises And IPOs

Viridian Capital Advisors is one of the world’s main financial and strategic advisory firms for the cannabis industry. Benzinga recently had the chance to talk to the company’s founder and president Scott Greiper, and one of its analysts, Harrison Phillips, who shared some insight into the legal marijuana market.

Deal Flow

Every week, Viridian published two reports, one tracking the performance of its Cannabis Stock Index and another tracking the most recent investment and M&A activity in the marijuana industry.

As per the latest report, the week of December 2–9 witnessed 23 cannabis-related announcements:

• 11 capital raises.
• Five M&A transactions.
• Two M&A and go-public transactions.
• Two joint ventures.
• One go-public transaction.
• One strategic alliance with a fund.
• One new fund for university cannabis research.

Even more interesting, the deals closed last week pushed the industry dollars raised since January above the $1 billion threshold.

“Once again, we’re seeing significantly increased deal sizes this week, versus the same week last year,” Greiper commented. “So, the three capital raises that we tracked (and closed) this week [reached] a total of $31.5 million, or about $10.5 million each capital raise. Last year, the average deal size was a little over $800,000. So, there’s a maturity in the capital markets that’s happening in North America in terms of frequency of transactions and size of transactions.”

Capital raises were seen in Organigram Holdings Inc  OGI OGRMF, Tetra Bio-Pharma Inc TBP GRPOF and Players Network PNTV.

Moreover, Viridian’s president continued, the number of M&A transactions goes on to surge as well. “We are reporting four M&A deals that closed. Last year, at this point in time, there were zero.”

M&A transactions this week included:

• iAnthus Capital IAN ITHUF’s acquisition of Organix, LLC.
• Emblem Corp EMC’s reverse merger into Saber Capital Corp.
• CannaRoyalty CRZ CNNRF’s open in the Canadian Stock Exchange and its acquisition of 70 percent of Achelois, LLC.
• PharmaCan Capital Corp MJN PRMCF and Canadian First Nations' joint venture, Indigenous Roots.

Well Funded Sectors

Benzinga moved on to ask about sectors attracting the most capital.

As seen in the year-to-date chart embedded above, “biotech continues to be the sector leader in terms of attracting the most capital, attracting a little over $0.40 of every dollar of invested capital this year,” Greiper revealed.

“Second to that is cultivation. For the reasons I described regarding the AgTech sector, cultivation facilities are getting larger and more sophisticated, they are attracting smarter dollars, and those smarter dollars are mandating that the cultivation facilities, because they are competing on price, are adopting and embedding more advanced technologies,” he added. “Cultivation is attracting about $0.30 of every invested dollar of capital this year.”

IIPR’s IPO

Finally, Benzinga asked about Innovative Industrial Properties Inc IIPR’s IPO, which marked the first time a marijuana-related stock traded in a major stock market.

“We have two thoughts on that (and, again, we are not commenting on the company itself, just on the capital markets transaction). [First off, we believe it is] very positive that a major exchange would allow its first cannabis company IPO,” Greiper responded. “It’s a real estate play, so it’s not touching the plant in that regard. But, nonetheless it’s a cannabis real estate investment trust, so, I think it’s another step along the evolution of this market in general, and another step along the evolution of the capital markets in this industry.

“The flip-side of that is that the company priced the transaction at roughly half of what they initially intended to go out with. So, clearly there was some pressure on filling the book and getting the pricing done in the initial range they had filed. [Having said this], I would have to believe that the timing was a bit unfortunate for Innovative Industrial Properties, because of the announcement by Mr. Trump of Jeff Sessions as a potential AG, and the concern that that caused in the marketplace," he concluded.

Liked this interview? Check out our conversation with Blues Traveler's Brendan, who shared the story of one of his best joints ever, which he smoked with Metallica, Neil Young and Marilyn Manson.