Webinar: A Look At The Cannabis Industry's $700M Potential Tax Break Amid A 70% Drop In Capital Raises

MGO and Viridian Capital Advisors have joined forces to launch the Cannabis Capital Markets report. This comprehensive analysis, set to be unveiled in a live webinar titled "What's in Store for Cannabis Capital Markets?" on Tuesday, February 20, 2024, aims to shed light on the intricacies of capital raises, mergers and acquisitions (M&A), and the potential fiscal benefits of regulatory reform within the cannabis sector.

Interested parties can register here.

The webinar, featuring a panel of esteemed financial experts from both MGO and Viridian, promises an in-depth exploration of the latest trends in cannabis capital raises and M&A deals. It will also delve into the ramifications of the proposed rescheduling and 280E reform on capital markets, offering predictions for 2024 and beyond. Attendees are in for a real treat, as they will receive a complimentary copy of the report, filled with exclusive data and insights.

The report itself paints a vivid picture of the current state of the cannabis capital market. It reveals a significant drop in total capital raised —nearly 70% in 2023— with debt financing accounting for almost 60% of the funds. Highlighting the potential repeal of 280E, the report suggests that top Multi-State Operators (MSOs) could see $700 million in annualized tax savings, underscoring the financial impact of legislative changes on the industry.

Key findings include a detailed analysis of capital raises by year, size, sector, and state, along with the top debt and equity raises and M&A deals of 2023. The report also examines the effect of the Health and Human Services (HHS) rescheduling announcement on the market and identifies emerging states likely to drive growth and increased EBITDA.

Commenting on the news, Scott Greiper, CEO and founder of Viridian Capital Advisors noted the immediate market response to the HHS's rescheduling recommendation, highlighting the potential for legislative change to reshape the industry's financial landscape.

"Federal regulatory reform presents a significant opportunity for the cannabis industry, and a clear driver of increased investment and M&A activity," he told Benzinga. "Since plant-touching businesses are denied many traditional paths to financing, the future of the cannabis and hemp industries will largely be shaped by rescheduling and legislative change. We can see this clearly in the data — when the HHS made its rescheduling recommendation in late 2023, MSO stock prices nearly doubled and next-twelve-month valuations increased by 50 percent."

Scott Hammons, a cannabis industry leader at MGO, emphasized the strategic M&A opportunities in emerging adult-use states, reflecting a cautious yet optimistic outlook for future capital market activities.

"Although we have seen companies being more restrained with their M&A strategy,  we anticipate increased activity, especially if rescheduling happens.

Emerging adult-use states like New Mexico, Missouri and Maryland and potential adult-use states like Florida have already cracked the M&A top 10 in 2023. "Our hope with this report is to share collective insights that can help investors and operators navigate current capital markets, understand the M&A landscape, and manage their financial strategies," Harmon told Benzinga in an email.

This report and the accompanying webinar offer a critical overview of the challenges and opportunities facing the cannabis industry as it navigates through complex regulatory and market conditions. With insights from leading financial professionals, the Cannabis Capital Markets report is poised to become an invaluable resource for operators and investors alike, looking to understand and capitalize on the evolving dynamics of the cannabis sector.

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.