Weekly Deal Watch: New cannabis markets, value creators ripe for investment

This weekly series from Marijuana Business Daily and Viridian Capital Advisors provides the latest data on cannabis investment activity and M&A, along with key takeaways, analysis and trends based on recent market moves.

The data below, provided by Viridian Capital Advisors, is through the week ended Feb. 15.

Top takeaways from capital raises:

• California-based marijuana producer and distributor Flow Kana closed a $125 million raise – the largest private funding round for a cannabis company in the United States. “As the industry continues to commoditize, companies in the supply chain that can enhance effectiveness or efficiencies in operations – whether through better technologies or specialization and trade – can create value,” said Harrison Phillips, vice president at Viridian Capital Advisors. “Flow Kana is specializing in large-scale processing for small-scale farmers, providing ‘mom-and-pop’ operators access to equipment and services they would be hard-pressed to afford on their own.”
• Canadian licensed producers continue to lay claim to capital, including Quebec-based Hexo Corp. (HEXO on TSX and NYSE), which closed on a bank debt facility of 65 million Canadian dollars ($49.2 million) that includes a CA$50 million term loan and a CA$15 million revolving loan. The deal comes with an “uncommitted” option to increase the facility by up to CA$135 million.

Top M&A takeaways:

U.S. medical market licensees remain top targets for acquisition, as illustrated by two key transactions:

• Green Thumb Industries (CSE: GTII) acquired Advanced Grow Labs in Connecticut.
• MedMen (CSE: MMEN) acquired Level Up in Arizona.

“Newer markets are more likely to provide investors access to the first-movers, but they may need to wait some time for the market to develop and scale,” Phillips said.

“Conversely, entering into a more mature market likely provides less opportunity for organic growth but may present opportunity for consolidation.”

Viridian Capital Advisors is a financial and strategic advisory firm that provides investment banking, M&A, corporate development and investor relations services to emerging growth companies and qualified investors in the cannabis sector.