Viridian's President Shares An Update On Marijuana Stocks, M&A And Investments: Deals Surpass $1 Billion

Viridian Capital Advisors is one of the world’s main financial and strategic advisory firms for the cannabis industry. Every week, the company publishes 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.

On Thursday, Benzinga had its weekly chat with the company’s founder and president Scott Greiper, who shared some insight into the latest moves in the space.

Deal Flow

“The headline for most of this week, covered in a Forbes article that ran on Wednesday [and in a Benzinga article last week] is our passing of the $1 billion mark in terms of the amount of investment capital we’ve tracked coming into the industry,” the expert began.

“This is obviously highly significant; it’s a milestone for the industry, and I just think it shows people that [...] although $1 billion of investment is not significant for other standalone verticals like agtech or manufacturing or defense or whatever— an industry that is still federally illegal attracting this much capital, is significant,” he added. “This has so much meaning, beyond the dollar amount. There’s so much nuance there that this is becoming a mainstream industry attracting mainstream operators and mainstream investors. Despite the fact that this cloudiness that still exists, there’s been a rolling pace of state legalization and federal illegality, and I just find it very interesting.”

Relevant Transactions

As per Viridian’s Cannabis Deal Tracker, the week ended December 16 witnessed:

• Six capital raises.
• Seven M&A transactions.
• One go-public transaction.
• One joint venture.
• One new cannabis angel investment group

“I think there’s two deals to focus on [this week],” Greiper commented.

One was seen in Scotts Miracle-Gro Co SMG, which “closed two acquisitions as part of its efforts to build-out its Water Positive Landscapes Initiative and Connected Yard Internet of Things solution for both indoor and outdoor growing spaces.”

This is important, not only because Scotts is a NYSE-traded company, but also because “quite frankly, they are the lone strategic player in the space right now, and I think that has been unexpected. There was a general expectation in the industry and from Viridian as well [for 2016 to be the year] where the larger OEMs would make their first claims in the space through strategic acquisitions,” he supplemented.

“In fact, Philip Morris International Inc. PM did, but they did it through an Israeli company [Syqe Medical] that had come out with the first true medical marijuana inhaler [...] So, the fact that Scotts has been the only significant acquirer in the space is a surprise,” he concluded, pointing out how federal illegality continues to impact the cannabis industry, keeping larger institutional acquirers out of the market.

The other big transaction this week was Canadian licensed producer Supreme Pharmaceuticals Inc SL SPRWF’s C$55 million ($40.75 million) bought deal financing of convertible notes. “The syndicate for the Brokered Offering was led by Canaccord Genuity Corp. and included Dundee Securities Ltd., Beacon Securities Limited and Cormark Securities Inc,” the company declared.

This is very relevant not only because of the size of the capital raise — the largest single investment transaction in the industry besides GW Pharmaceuticals PLC- ADR GWPH, but also because of the fact that this was a bought deal, “which is in fact a true underwriting where an investment bank actually takes the entire transaction for itself and then goes out and re-sells it to its clients,” Greiper expounded. “That’s not typical in any industry, and it shows the bullishness of Canadian investors in cannabis.”