Marijuana retail technology firm Dutchie said Thursday it has snagged $350 million of funding to support its fast growth, the latest in a frenzy of $100 million-plus capital raises that signal cannabis investors are writing increasingly large checks.
Dutchie’s Series D funding round is among the larger raises for a U.S. cannabis company and comes only seven months after the company raised $200 million of capital and acquired two other marijuana software platforms, Greenbits and LeafLogix.
Oregon-based Dutchie – which offers an online cannabis ordering platform – said it is now valued at $3.75 billion, more than doubling the company’s valuation in less than seven months.
Based on that $3.75 billion valuation, investors in the new $350 million funding round are gaining a combined nearly 10% ownership interest in Dutchie.
The Dutchie deal comes on the heels of Florida-based Trulieve Cannabis raising $350 million through the sale of five-year notes at an annual interest rate of 8%.
The Dutchie equity deal and the Trulieve debt financing underscore large investor enthusiasm around plant-touching and ancillary companies as federal legalization inches closer.
“Dutchie is the tech backbone helping propel one of the fastest-growing industries in the world, and we’re all in to advance their mission,” Emily Corning of New York-based D1 Capital Partners, which led the funding round, said in a news release.
The Dutchie equity deal also bucks the trend.
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New York-based Viridian Capital Advisors wrote this week that debt has become the preferred capital-raising vehicle in recent months, fueled by better terms, including lower loan rates.
“Cannabis history has taught us that when the market offers attractive capital, take it, even if you don’t think you need it,” Viridian wrote.
The dynamics, however, are different between private companies such as Dutchie and large public multistate operators such as Trulieve.
Young private companies traditionally rely heavily on equity funding to build their businesses.
For large public MSOs, low stock valuations, healthy cash positions and the continuing uncertainty of federal marijuana legalization are all good reasons to “keep your equity powder dry and wait for a better window,” according to Viridian.
In addition to Dutchie and Trulieve, here are other $100 million-plus capital raises in recent months:
- October: Cannabis real estate lender AFC Gamma announced an offering of $100 million in senior unsecured notes, with timing and exact terms to be determined.
- August: Massachusetts-based Ascend Wellness raised $210 million through the sale of four-year notes at an annual interest rate of 9.5%.
- May: Verano Holdings, an Illinois-based MSO, raised $100 million through a debt financing at an annual interest rate of 9.75%.
- April: Illinois-based Green Thumb Industries raised $217 million by issuing three-year notes at a 7% annual interest rate.
As for Dutchie, its new funding will go toward market expansion, including outside North America, and to “double-down” on the company’s research and development of products that support cannabis dispensaries.
Dutchie, which provides point-of-sale services, e-commerce and more, works with more than 5,000 dispensaries in North America.
The company said its workforce has more than doubled in the past six months to more than 500 employees across 40 U.S. states and in Canada.
“We are powering cannabis commerce through the products and support that we provide our dispensary partners,” Ross Lipson, Dutchie CEO and co-founder, said in the release.
Other investors in Dutchie’s latest funding round include Tiger Global, Dragoneer, DFJ Growth, Thrive Capital, Gron Ventures and Casa Verde Capital as well as new investors such as Willoughby Capital, Glynn Capital and Park West Asset Management.
Jeff Smith can be reached at firstname.lastname@example.org.