Cannabis Deal Tracker: Investment and M&A Activity in the Cannabis Industry July 20th - July 24th, 2020

July 29, 2020 (Investorideas.com Newswire) KEY INSIGHTS & TAKEAWAYS

CAPITAL RAISES

• Transactional Activity: Week 30 ended July 24, 2020, saw a 17.3 times higher dollar volume and 67% more transactions vs. the prior week of this year and a sharply higher dollar volume with a lower number of transactions vs the prior-year period. We recorded 5 capital raise transactions totaling $257.6 million, vs. 11 transactions totaling $16.2 million during the same week in 2019. The average tranche size was $51.5 million this week, vs. $1.5 million in the prior-year period. The capital raised this week was dominated by the $250 million Leaflink financing below.
• Largest Cap Raise: On July 23, 2020, Leaflink, Inc. a private wholesale inventory and ordering platform closed a $250 million secured financing facility with an undisclosed commercial borrower. Terms were not disclosed. Leaflink’s business connects over 5000 dispensaries with over 1500 brands and distributors. It allows dispensaries and retail shops to stock their shelves through a centralized ordering and tracking application. Proceeds are expected to be used to extend the companies receivables factoring business in which it provides financing to brands, distributors and producers based on the receivables from their dispensary customers.
• Public vs. Private Cap Raises: Of the 5 capital raises, 3 were closed by public companies. So far in 2020, public companies have accounted for 80% of all capital raises, vs. 68% for the same period in 2019. In 2020, public companies have accounted for 80% of total dollars raised, vs. 72% for the same period in 2019. Cannabis stock prices have increased in each of the last 3 weeks and are now 92% higher than their bottom in mid March. Viridian Deal Tracker data shows a clear relationship between cannabis stock prices and both capital raise and M&A activity. Recent earnings releases showing continued stable revenues and profitability despite the COVID weakened, are also adding to capital markets confidence in the sector.
• Public Company Listings: Of the 3 public company capital raises, all 3 are listed in Canada on the CSE and all 2 also trade on other exchanges (1 on the OTCQB and 1 on the FSE).
• Equity vs. Debt Cap Raises: Equity-based capital raises accounted for 4 of the 5 transactions but only 2.9% of the proceeds raised. Debt financing is resurging based on strong reported operating results. Along with this week’s potentially game-changing Leaflink transaction, we continue to anticipate the closing of last weeks announced $17.4 million deal for MSO Jushi Holdings.
• Largest Equity Raise: On July 20, Texas Original Compassionate Cultivation (“TOCC”) closed a US$5.1 million, Series A fund raising led by Viridian Capital. TOCC has a leading position in the Texas vertically integrated medical cannabis market and is poised for future growth. Funds will be used to scale the company’s operations.
• Cap Raises by Sector: The 5 capital raises this week were spread across 5 different industry sectors with one each in the Biotech/Pharma, Cultivation & Retail, Infused Products and Extracts, Software/Media, and Miscellaneous Ancillary sectors.

MERGERS & ACQUISITIONS

• Transactional Activity: Week 30 saw 2 M&A transactions, vs. 8 in the prior year period. Though M&A activity is still far below the levels seen during the first half of 2019, we have begun to see a pickup in weekly activity. This is likely driven by the recently improved stock price performance of public cannabis companies, which have been the dominant acquirers.
• Largest M&A Transaction: On July 23rd, Curaleaf Holdings closed its long awaited acquisition of private company Grassroots Inc., which was originally announced in July 2019. The renegotiated deal is valued at approximately $700 million, down from approximately $875 million when originally announced. The transaction makes Curaleaf the world’s largest cannabis company by revenues and gives it the leading market position in two key states (Pennsylvania and Illinois) while adding 4 new states to the company’s map (North Dakota, Vermont, Arkansas, and Missouri). The all stock consideration for the deal is approximately 118.9 million Curaleaf subordinated voting shares, representing approximately 18% of the pro forma fully diluted shares.
• Public vs. Private: Both of this week’s acquisitions were made by public companies as has been the case in 93% of M&A transactions announced in 2020. Public companies, particularly with the recovery in stock prices and fund raising ability, have been the dominant acquirers in the cannabis industry. Of the acquired companies, both were private. Private companies remain the dominant targets for acquirers.
• M&A by Sector: Buyers came from 2 different sectors, 1 each in Cultivation & Retail, and Infused Products & Extracts.

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&Amp;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&Amp;A transactions totaling over $45 billion in aggregate value.

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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.

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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.

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