Chart of the Week: Cannabis – Touching Firms Finally in Vogue With Investors
By Becky Olson
For years, most investors interested in the cannabis space avoided companies that actually touch the plant in favor of “safer” ancillary businesses that provide products and services to the industry or consumers.
That’s starting to change rapidly.
A look at a broad sample of single investment deals in the cannabis industry since the beginning of 2015 reveals that dispensaries, retail stores, cultivation sites, infused products companies and testing labs are starting to land some sizable amounts of capital.
A licensed cultivation company in Canada, for instance, landed $121,000, while Minnesota’s two licensed dispensary and cultivation operators netted a combined$29 million in what rank as the largest single deals in the industry this year.
Marijuana Business Daily analyzed investment deals detailed in company press releases, filings with the Securities & Exchange Commission, media reports and other sources. The deals involve angel investors as well as venture capital and private equity firms, while the funding methods include everything from promissory notes to convertible debentures and private stock placements.
Both early-stage and established businesses have landed capital so far this year.
With the notable exception of Texas-based LED lighting company Illumitex, which successfully raised $16 million earlier this year but doesn’t exclusively serve the cannabis industry, some of the largest capital raises in 2015 thus far have been for early-stage companies dedicated to marijuana.
Early-stage businesses, which may not even be generating revenue at the time of the capital raise, are landing investment money to help them purchase land, construct/renovate buildings, win pricey operating licenses, and recruit qualified management teams and staff.
Marijuana delivery platform Eaze and Minnesota’s two new licensed cultivation/dispensary operators, Minnesota Medical Solutions (MinnMed) and LeafLine Labs, are all startups fully dedicated to the cannabis space and have completed some of the industry’s largest single capital raises this year at $10 million, $17 million and $12 million, respectively.
While these large dollar figures garner the most attention, the other end of the spectrum nevertheless reveals plenty of capital is still exchanging hands.
At least 15 deals for cash infusions of $1 million or less have occurred since January – 12 of which were for amounts less than $500,000. While the intended use of those funds is not always disclosed, both early-stage and expansion-phase companies successfully completed rounds of fundraising for $1.5 million or less.
With changes occurring on all fronts from the number and type of investors involved, the amount of money being funded and the stages at which it’s being obtained, there’s a lot of capital moving around. This gives cannabis entrepreneurs and investors alike ample reason to be optimistic about entry or growth opportunities in the country’s quickest growing industry.
Becky Olson can be reached at email@example.com