Despite Slow Public Markets, Low-Teens Cannabis Capital Raises Proliferating

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 $30 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

10/7/2019 - 10/11/2019

CAPITAL RAISES

• Integrated CBD, one of the larger providers of hemp and CBD in the U.S., raised more than $50 million between two tranches, a senior secured debt raise and a Series A financing. In its release, Integrated CBD announced the senior debt round was led by a multi-billion-dollar hedge fund in New York City, signifying the continued interest of institutional investors in the burgeoning hemp/CBD space and the cannabis industry as a whole. However, given the federal illegality of cannabis and THC products, these institutions are currently limited to investing in only a subset of the subsectors of the cannabis industry.

• Viola, a California-based producer of various cannabis products led by NBA veteran and cannabis advocate, Al Harrington, announced the closing of a $16-million funding round led by Gotham Green Partners. California operators continue raising capital given the significant market opportunity in the state. Additionally, branded product companies such as Viola with product distribution to multiple states are becoming more attractive to investors given brands' potential to mitigate pricing compression as the industry matures and competition increases.

• MediPharm Labs, a licensed producer in Canada specializing in cannabis extraction, expanded and drew down upon its credit facility to accelerate infrastructure development in Canada and Australia. Particularly, it is ramping its development in Canada to prepare for the coming launch of infused products in the Canadian adult-use market.

MERGERS & ACQUISITIONS

• Cresco Labs, one of the largest multi-state operators in the U.S., acquired Gloucester Street Capital, the parent entity of Valley Agriceuticals, one of only 10 cannabis licensees in the state of New York. Operators continue to acquire licensees in limited license states, and New York's low count of just 10 licensees, combined with its significant population size, yields more favorable supply/demand dynamics for these operators. Additionally, New York has announced its intentions to legalize adult-use cannabis, the passage of which would further increase the market potential.

• Fire & Flower, a cannabis retailer in Canada, announced the closing of an acquisition of eight cannabis retail store locations from Cannabis Cowboy Inc. Since the launch of Canada's adult-use market, we have seen more licensees specialize on a single portion of the value chain, in this case retail. We expect further specialization towards product creation as infused products are introduced to the Canadian market.

WEEKLY SUMMARY