Cannabis Capital Raises Surpass $10B As Auxly, Cresco Labs, Green Peak, KannaSwiss, And Others Strike Big Deals

The Viridian Cannabis Deal Tracker is an information service that monitors capital raise and M&A activity in the legal cannabis industry. Analyzing within 12 key industry sectors, the Viridian Cannabis Deal Tracker provides cannabis companies, investors, and acquirers with the data, trends, and intelligence they need to make informed decisions regarding deal valuations, terms, and structures. Since its inception, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,400 capital raises totaling over $29 billion as well as more than 900 M&A transactions. Find it exclusively on Benzinga Cannabis every week!

INVESTMENT AND M&A ACTIVITY IN THE CANNABIS INDUSTRY

9/23/2019 - 9/27/2019

CAPITAL RAISES

• Auxly Cannabis Group XLY, a Canadian diversified investment vehicle building out a portfolio of international cannabis assets, closed a C$123M (~US$93M) strategic investment from Big Tobacco company Imperial Brands that is convertible into a 19.9% ownership in Auxly. As part of this transaction, Imperial granted to Auxly global licenses to its vaporization technology and access to its vaporization innovation business, Nerudia. In exchange, Imperial has chosen Auxly as its exclusive partner for the future development, manufacture, commercialization, sale, and distribution of any type of cannabis product globally. This deal signifies yet another material investment by a large strategic in the cannabis space. We expect more of these transactions to occur as the industry continues to evolve, specifically following material medical liberalization in Europe and federal legalization in the United States.

• Cresco Labs CL, one of the largest multi-state operators (MSOs) in the United States, closed its C$73.5M (~US$55.5M) public offering. While the capital markets in cannabis have slowed down in 2019 as the public markets have sold off, select operators, particularly those with larger asset bases and footprints, have been more able to continue raising capital, especially if they are positioned in markets with significant future potential, to further build out their operations.

• FarmaceuticalRX, LLC, a licensed operator in Pennsylvania and Ohio, announced the closings of two capital raises totaling US$18M. Though only having a material footprint in two states, the competitive dynamics (relatively limited licenses) and growth forecasts of these two states positions operators therein, including FarmaceuticalRX, with what could be favorable circumstances.

• Green Peak Innovations, one of the largest licensed operators in Michigan, raised a US$10M mezzanine debt round to accelerate the development of its infrastructure in Michigan in preparation for the state's adult-use market launch in 2020. We continue to see "land grabs" undertaken by operators seeking rapid scale in preparation for subsequent expansions of market demand.

• KannaSwiss AG, a CBD provider in Europe, announced a US$5.5M investment from NYC-based cannabis-focused fund, Altitude Investment Management. This deal illustrates two trends: 1) the continued expansion of the CBD market globally; and 2) the steady expansion of investors' focus on the burgeoning cannabis and hemp opportunities in Europe.

MERGERS & ACQUISITIONS

• Jushi Holdings, a relatively new U.S. MSO, expanded into a new state via the acquisition of Dalitso, one of five current medical cannabis licensees in Virginia. While this transaction was not materially significant in size, it reflects a continued trend whereby operators continue to acquire licensees in states that have limited license structures as these potentially present favorable competitive environments.

WEEKLY SUMMARY