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Cannabis Deal Tracker: Investment and M&A Activity in the Cannabis Industry February 8th - February 12th, 2021


February 17, 2021 ( Newswire) KEY INSIGHTS & TAKEAWAYS


  • Transactional Activity: There were five more capital raises, $323.7 million higher volume this week than in the prior week. Compared to the same week last year, there were seven more transactions and a $371.1 million higher volume. The average deal size was $29.1 million this week vs. $12.4 million in the same week last year.
  • Equity issuance through the first six weeks continues to be at historic levels. The $1.87 billion of closed deals in 2021's first six weeks was 41% higher than the previous high set in 2018, driven by record-high average deal size. Two of the ten most extensive weeks of equity issuance in cannabis history have occurred in 2021. We don't believe the equity issuance spree is over. Trulieve (which has a jumbo shelf registration for the issuance of up to C$750 million (approx.US$584 million) of mixed equity and debt securities) and Harvest Health and Rec are now the only two of the top ten market cap companies yet to be heard from. Still, we continue to expect to see equity issuance broaden to the second-tier companies. The Viridian Capital Graph of the Week clearly shows that the large and small companies' valuation gap is at a historic high, which is a potential stumbling block.
  • This week's issuers were an eclectic mix of MSOs, SPACs, subsidiaries of public companies, and companies completing rights offerings.
  • Largest Equity Raise: On February 12th, 2021, Tuatara Capital Acquisition Corp. (Nasdaq: TCACU), a New York-based SPAC sponsored by Tuatara Capital, a leading cannabis private equity firm, closed a US$175 million IPO of 17.5 million units at US$10.00 per unit. Each unit consisted of one share of stock and ½ share of warrants with an exercise price of $11.50. The SPAC has a prescribed timeline of 24 months to complete a qualifying transaction.
  • It is undoubtedly an exciting time to do a SPAC. On the one hand, cannabis stocks are red hot, so it would appear quite challenging to find bargain-priced acquisitions and earn outsized returns. On the other hand, there is an extreme size-based arbitrage evidenced in the market today. Small market cap companies trade for an average forward multiple of around 10x EBITDA, whereas their larger brethren are typically valued at more than 20x. The obvious question is whether a series of acquisitions can produce a boost in valuation multiples and thereby create value. Sounds pretty implausible to us efficient market believers, right? But look at the top ten market cap companies and see if you can't pick out at least two that fit this bill. Using 20x EBITDA currency to buy 10x EBITDA assets sounds like a pretty good business to us.
  • Green Thumb closed the second-largest issue of the week with its US$100 million initial public offering in the U.S. of 3.12 million shares at US$32.03 per share.
    • A single institutional investor purchased the shares at a very slight discount to pre-announcement prices.
    • The transaction values GTI at approximately 24x 2021 consensus EBITDA, in line with the median of 24.6x we calculate in the Viridian Value Tracker for U.S. Cultivation & Retail sector companies with more than $1 billion market cap.
    • GTI's excellent liquidity, low leverage, and leading profitability combine to place it in the #1 position in credit strength on the Viridian Credit Tracker. The company could easily tap the debt markets if it chose to.
  • Public vs. Private Cap Raises: Fifteen of this week's seventeen capital raises were closed by public companies. Public companies raised approximately 96% of the capital year to date in 2021, up from 95% last year. There has been a consistent trend towards public company capital raises, taking advantage of newly robust capital market conditions.
  • Public Company Listings: Thirteen of the fifteen public companies which raised capital are listed in Canada (nine on the CSE, four on the TSX). Fourteen were also listed on U.S. or international exchanges (eleven on OTC, one on NYSE, one on Nasdaq, and one on FSE).
  • Equity vs. Debt Cap Raises: Equity-based capital accounted for all seventeen of this week's capital raises.
  • Largest Debt Raise: There were no completed debt issues this week.
  • There has only been $93 million of debt raised in the first six weeks of 2021, roughly 35% of the amount raised in the next lowest year, 2018. The pattern makes obvious sense: the years when equity multiples are highest are when companies issue the most equity and the least debt. But the credit difference in the cannabis industry from 2018 to 2021 is quite stark. One could reasonably assume that not much debt was issued in 2018 because practically none of the major companies were EBITDA positive. In contrast, In 2021, the top tier of cannabis credits has numbers that rival BB high yield bonds.On that basis, we keep expecting to see more debt issuance. Will it take a crack in the equity market for this to happen?
  • Cap Raises by Sector: There was a highly diverse mix of sectors represented in this week's capital raises. Five of the companies came from the Cultivation & Retail sector, three from Infused Products & Extracts, three from Investments/M&A, three from Biotech/Pharma, one from Software/Media, one from Real Estate. And one from Miscellaneous Ancillary.


  • Transactional Activity: Three M&A transactions were completed this week, matching the number from the prior-year period. We have only tracked 18 transactions in 2021, the second-lowest since the dismal 12 recorded in the same period in 2020. The M&A totals for 2021 are a bit deceiving due to the lack of publicly available data on several deals. This week's largest transaction will create a top 5 MSO with a market cap of close to $3 billion. We continue to see signs of accelerating M&A activity, with a significant backlog of announced deals still to close.
  • Largest M&A Transaction: On February 11th, Verano Holdings (CSE listing pending: VRNO), one of the largest private MSOs, announced the closing of its reverse takeover ("RTO") of Majesta Minerals Inc., which will lead to Verano becoming a publicly traded equity on the CSE under the symbol VRNO. Verano also announced the closing of its merger with AltMed LLC and affiliated operations with operations in Arizona and Florida.
    • A previous sale of $100 million in subscription receipts placed a pre-money valuation of $2.8 billion on the entity, placing it in the ranks of the top 6 MSOs by market cap.
    • The combined entity will have operations spanning 14 states with 54 operational retail locations.
    • Verano is estimated to have had 2020 Revenues of approximately $380 million with adjusted EBITDA of 160 million. The resulting EBITDA margin of roughly 42% makes Verano one of the most profitable MSOs.
    • The company's CEO George Archos said that the transactions aimed to give the company better access to capital for further expansion.
  • Public vs. Private: Two of this week's three acquisitions were made by public companies. With the recent surge in cannabis stock prices, we expect public companies to make add-on purchases of private companies using primarily stock as currency.
  • M&A by Sector: The buyers in this week's transactions came from three different sectors: Cultivation & Retail, Infused Products & Extracts, and Investments/M&A. Two of the targets came from non-plant-touching: Non-Cannabis Related and Miscellaneous Ancillary sectors, with the other coming from the Cultivation & Retail sector.


The Viridian Cannabis Deal Tracker is a proprietary information service that monitors capital raise and M&Amp;Amp;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;Amp;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;Amp;Amp;A transactions totaling over $45 billion in aggregate value.

*Copyright © 2021 by Viridian Capital Advisors

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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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About Viridian Capital Advisors, LLC

Viridian Capital Advisors ( 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&Amp;Amp;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&Amp;Amp;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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