Cannabis Funding 2020: Fewer Raises, Bigger Numbers

The Viridian Cannabis Deal Tracker provides the deal data/terms/valuations/structures and market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital and M&A strategy.

The Viridian Cannabis Deal Tracker is an information service that monitors capital raise and M&A activity in the legal cannabis industry. Each week the Tracker analyzes/aggregates all closed deals and allocates each transaction to one of twelve 12 key industry sectors in which the deal occurred (from Cultivation to Brands), the region in which the deal occurred (country or U.S. state), the status of the company announcing the transaction (public vs. private) and th type of deal structure (equity vs. debt).

Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $45 billion in aggregate value. Find it exclusively on Benzinga Cannabis every week!

INVESTMENT AND M&A ACTIVITY IN THE CANNABIS INDUSTRY

01/27/2020 - 01/31/2020

CAPITAL RAISES

Capital raise activity was strong last week as three large public cannabis companies announced $425 million in funding. As such, although the number of raises was down, the average raise rose to $66.8 million, from $15.9 million.
Publicly traded companies represented six of the seven capital raises, demonstrating that even in a depressed stock price environment for public cannabis companies, investors will still chase liquidity. Since the origin of the Viridian Cannabis Deal Tracker in 2015, public companies have attracted approximately two-thirds of all invested capital.
The Cultivation & Retail sector remains the dominant sector for investors as the capital markets continue to support the buildout of infrastructure required to scale top and bottom line. From 2015-2018, the Cultivation & Retail sector accounted for approximately 75% of all capital raises. However, in 2019 we saw this drop to 55% as capital allocation began to move into the Infused Products, Hemp and Consumption Devices sectors.
The Hemp/CBD sector experienced a significant private market raise of $40 million from EcoGen Laboratories as we see increased investment in the Hemp sector.

MERGERS & ACQUISITIONS

M&A activity remains slow with only one closed acquisition. High Tide purchased two dispensaries by acquiring a majority interest for a mix of stock and cash.
We foresee a gradual pick-up in M&A activity based on a few factors present in the marketplace:
The number of M&A transactions that are in LOI stage.
More aggressive activity on the part of SPACs (Special Purpose Acquisition Corp’s.) that raised over $1.2 billion in 2019 and have the clock ticking on when that capital has to be deployed.
The drastically reduced valuations, and valuation expectations, among private companies that are having great difficulty attracting new capital and as a result are looking for an exit.