So much for concerns about a federal government crackdown.
Much like the reaction by many public officials and consumers to U.S. Attorney General Jeff Sessions’ rescinding the Cole memo, financial backers in the marijuana industry seem unconcerned. Certainly, they’ve been willing to pony up a boatload of dollars so far in 2018 to back marijuana-related ventures.
How big a boatload? About $1.23 billion in just the first five weeks of the year, according to a report from Viridian Cannabis Deal Tracker, a service that monitors merger and acquisition deals and investment in the legal marijuana industry. That’s almost as much as the total amount of investment in the entire year of 2016, according to Benzinga, and a 600 percent increase over the $178 million raised in the first five weeks of 2017.
Seattle company leads the way
The report from Viridian comes on the heels of a recent announcement by Seattle-based Privateer Holdings on completion of a Series C funding round that raised $100 million for cannabis industry investment. The company plans to use the cash for acquisitions, funding new ventures and expanding existing brands into new markets.
Privateer Holdings’ portfolio includes medical cannabis company Tilray, the “official Bob Marley cannabis brand” called Marley Natural, marijuana edibles company Goodship and marijuana information site Leafly. The company reports it has raised $200 million so far to fund cannabis ventures.
As with many in the cannabis industry, their work is also a cause. In a statement made in a news release about the $100 million funding raised, the company’s three founders –0 Brendan Kennedy, Michael Blue and Christian Groh — released a joint statement that said the “war on cannabis is wrong” and “has made criminals out of millions of peaceful citizens,” especially in the minority community. “But hope is in sight. Brick by brick, the Berlin Wall of cannabis prohibition is crumbling, and safer, saner and more sensible cannabis policies are taking hold,” the three said.
Certainly, $1.23 billion will cause a few more bricks to fall.
Viridian Capital President Scott Greiper spoke with Benzinga about data in the new report. There were 65 capital raises in the first five weeks of 2018, with an average size of about $19 million. Nine of them raised more than $50 million. The majority of the investments went to cultivation and retail operations.
It’s happening in Canada, as well. Last year, companies anticipating the nationwide legalization of cannabis raised $2 billion. The country expects to make recreational marijuana legal this summer.
“While the medical market is expected to continue to grow over the next several years, the size of the coming adult-use market is expected to far exceed that of the medical side,” Viridian vice president Harrison Phillips told the Financial Post.
It seems many investors have a view that aligns with that of one of the “fundamental beliefs” of Privateer Holdings: “The end of cannabis prohibition is inevitable.”