Cannabis Capital Raises Slow Down Alongside Capital Markets
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 800 M&A transactions. Find it exclusively on Benzinga Cannabis every week!
INVESTMENT AND M&A ACTIVITY IN THE CANNABIS INDUSTRY
9/2/2019 – 9/6/2019
The same number of capital raises closed this past week as in the same week the year prior. However, overall capital raised was significantly lower this year, primarily driven by the current capital markets slowdown in cannabis. While this slowdown is likely to persist, we expect activity in the markets to accelerate towards year end and into 2020.
Of the seven capital raises, only one utilized an equity structure. However, this debt raise was also the largest we tracked in the week.
Of the seven capital raise transactions, only one was closed by an ancillary business, with the rest involving licensed operators (Cultivation & Retail, Infused Products & Extracts).
The largest raise tracked was closed by a Colorado-based licensed operator and was driven by the passage of Colorado HB19-1090, commonly known as the "pubco bill", that removes the prior prohibition of investment into or ownership of Colorado licensed cannabis businesses by out of state investors or public companies. We expect rapid consolidation of the Colorado market given the dramatically expanded prospective acquirer universe under this new legislation.
MERGERS & ACQUISITIONS:
We tracked five closed M&A transactions this past week, a count far fewer than the nine closed this week last year.
All five of the closed transactions involved public companies as the buyers and private companies as the targets.
The largest acquisition this past week involved a Canadian licensed producer (Cronos Group) acquiring an established, national cannabidiol (CBD) consumer goods brand (Redwood Holding Group operating under the marque Lord Jones).
Acquisitions of retail locations, both those already selling cannabis products and those that can be converted to cannabis storefronts, continue as vertically-integrated operators seek greater access to consumers and more salepoints for the expanding numbers and types of branded products.
MERGERS & ACQUISITIONS
Capital Raises by Week
Capital Raises by Sector
MERGERS & ACQUISITIONS
M&A Activity by Week
M&A Activity by Sector
Photo by Javier Hasse.
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