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Cannabis Deal Tracker: Investment and M&A Activity in the Cannabis Industry May 25th - May 29th, 2020

 

June 3, 2020 (Investorideas.com Newswire) CAPITAL RAISES: Transactional Activity: Week 22 ended May 29, 2020, was slow in terms of number of transactions and specifically in the very low average tranche size. We recorded 7 capital raise transactions totaling $7.0 million, vs. 18 transactions totaling $190.8 million during the same week in 2019. Average tranche size was $1.0 million, vs. $10.6 million in the prior year period.

Largest Cap Raise: The largest raise was closed by Ovation Science Inc. (CSE: OVAT) which announced a private placement offering of 4,000,000 units at a price of $0.42 per Unit for total proceeds of C$1,680,000. Each Unit consists of one common share and one half of one share purchase warrant. Each whole warrant will entitle the holder to purchase an additional share at a price of $0.60 per share for an 18-month term.

Public vs. Private Cap Raises: Of the 7 capital raises, 6 (or 86%) were closed by public companies. So far in 2020, public companies have accounted for 79% of all capital raises, vs. 66% for the same period in 2019. In 2020, public companies have accounted for 89% of total dollars raised, vs. 72% for the same period in 2019. This is indicative that investors are continuing to choose to invest in the cannabis sector through pubcos that offer greater liquidity. Also driving this increase is the recovery in cannabis stocks in general coming off of the lows reached after the initial impact of COVID-19.

Public Company Listings: Of the 6 public company capital raises, all are listed on Canadian exchanges (5 on the CSE, 1 on the TSX), 3 are U.S. exchange listed (OTC), and 1 is listed on the Frankfurt Stock Exchange.

Equity vs. Debt Cap Raises: Equity-based capital raises accounted for 6 of the 7 transactions, with a convertible debt-based financing accounting for the other deal. Of the 6 equity deals, 4 had attached warrants as part of the raise.

Largest Debt Raise: The one debt-based transaction was completed by Nutritional High International (CSE: EAT) (OTCQB: SPLIF), which announced a US$0.20 million convertible debt financing. The debt carries a 12.0% coupon and has a three-year term ending May 29, 2023.

Cap Raises by Sector: The Infused Products & Extracts sector accounted for 4 of the 7 cap raises, with Software/Media, Biotech/Pharma and Investments/M&A accounting for one deal each. As the “Capital Raises by Sector” chart below indicates, we’ve witnessed much greater diversity in sector investment this year than in 2019, indicating to us that the industry is maturing beyond state licensed operators and that investors are increasingly attracted to ancillary companies.

MERGERS & ACQUISITIONS

Transactional Activity: We recorded no M&A transactions during Week 22 of 2020, vs. 9 in the prior year period.

VIEW DEAL TRACKERS

The Viridian Cannabis Deal Tracker is a proprietary information service that monitors capital raise and M&A activity in the legal cannabis and hemp industry. Each week the Tracker aggregates and analyzed all closed deals and segments each according to key metrics:

  • Industry Sector (one of 12 sectors, from Cultivation to Brands)
  • Dollar value of the transaction
  • Region in which the deal occurred (country or U.S. state)
  • Status of the company announcing the transaction (Public vs. Private)
  • Deal structure (equity vs. debt)
  • Key deal terms

The Viridian Cannabis Deal Tracker provides the market intelligence that cannabis companies, investors, and acquirers utilize to make informed decisions regarding capital allocation and M&A strategy.

Since its inception in 2015, the Viridian Cannabis Deal Tracker has tracked and analyzed more than 2,500 capital raises and 1,000 M&A transactions totaling over $45 billion in aggregate value.

*Copyright © 2020 by Viridian Capital Advisors

All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher. No part of this material may be (I) copied, photocopied, or duplicated in any form, by any means, or (II) redistributed without Viridian's prior written consent.

*Disclaimers

The information contained herein is for informational purposes and is not intended as a research report. It should not be construed as Viridian recommending investment in cannabis companies or as a solicitation to buy or sell any security or engage in a particular investment strategy. Investment in cannabis companies entails substantial risk. Before acting on any information, you should consider whether it is suitable for your particular circumstances and consult all available material, and, if necessary, seek professional advice.

Viridian Capital Advisors and its affiliates, as well as their respective partners, directors, shareholders, and employees, may have a position in the securities mentioned herein or may make purchases and/or sales from time to time. Viridian Capital Advisors, through broker-dealer services provided by Bradley Woods & Co. Ltd., (Member FINRA/SIPC), may act, or may have acted in the past, as a financial advisor to certain companies mentioned herein and may receive, or may have received, a remuneration for their services from those companies.

The above information whether in part or in its entirety neither constitutes an offer nor makes any recommendation to buy or sell any securities.

About Viridian Capital Advisors, LLC

Viridian Capital Advisors (www.viridianca.com) is a financial and strategic advisory firm dedicated to the cannabis market. We are a data- and market intelligence-driven firm that provides investment, M&A, corporate development, and investor relations services to emerging growth companies and qualified investors in the cannabis sector. Our banking practice, through broker-dealer Bradley Woods & Co. Ltd. (Member FINRA/SIPC), provides capital and M&A services to fund the growth of our clients, while our advisory practice helps to position and build their businesses. Our team's decades of high level operating and transactional experience on Wall Street in a variety of emerging sectors, allows Viridian to provide comprehensive strategic and financial solutions that assist cannabis enterprises in realizing their full potential.

Marijuana remains illegal under federal law. The federal government does not recognize marijuana to have any medicinal value. Marijuana cultivation, possession, consumption, sales, and distribution are illegal under federal laws and also certain state laws. Investors in cannabis may be subject to law enforcement actions. Please note that there are differences in marijuana laws from one state, county, or city to another. Furthermore there are substantial risks associated with investing in cannabis companies, including, without limitation, changes in applicable laws, rules, and regulations, risks associated with the economic environment, the financing markets, and risks associated with a company's ability to execute on its business plan.

Contact Us:

Viridian Capital Advisors, LLC
contact@viridianca.com

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