Interest in who is investing in the marijuana industry is mounting rapidly, and not without a reason.
Over the first five weeks of 2018, the Viridian Cannabis Deal Tracker registered $1.23 billion in investments in the cannabis industry, Viridian Capital President Scott Greiper told Benzinga. This compares to $178 million for the first five weeks of 2017, implying a growth in investments of almost 600 percent. Even more interestingly, the amount of money that came into the industry in January alone is pretty close to that seen over the entirety of 2016, when investments totaled $1.29 billion.
Benzinga has been reporting on the largest deals in the cannabis industry, but the aggregate data provides a different and interesting perspective.
Aggregate Data
Over the first five weeks of the year:
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The cannabis industry saw 65 capital raises, more than double from last year;
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Nine of these raises surpassed $50 million;
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87.6 percent of these raises were equity-backed, up from 70 percent last year;
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The average raise size was $19 million, compared to $5.9 million in the first five weeks of 2017;
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About 72 percent of the raises were conducted by publicly traded companies, down from 76 percent last year;
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Seventy-five percent of the total dollars raised went to public companies, up from 71 percent last year;
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Private companies still received more than $300 million, six times what they got in the first five weeks of last year; and
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Most of the investments went to cultivation and retail companies.
“Investments in cultivation and retail this year have been driven predominantly by the Canadian players,” Viridian Capital Advisors’ Vice President Harrison Phillips said.
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Interest rates for debt-back raises are declining slowly but steadily.
“Historically, it was mid-to-high-teens; today we are seeing far lower interest rates, especially for companies with a long operational histories or strong balance sheets,” Phillips said. “We’ve seen some debt-back raises now done with interest rates in the mid-to-high-single digits. That shows material improvement in the comfort levels of the investors getting into the space.”
Largest Capital Raises
The largest, single capital raises for the first five weeks of 2018, as measured in dollars:
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Hydropothecary Corp (OTC: HYYDF): $121.1 million
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MedReleaf Corp (OTC: MEDFF): $107.6 million
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Privateer Holdings: $100.0 million
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Organigram Holdings Inc (OTC: OGRMF): $93.4 million
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Aphria Inc (OTC: APHQF): $91.9 million
As evidenced by these large capital raises and the figures shared above, the number of deals and size of each tranche has been on the rise.