Alternative Medical Enterprises, a Sarasota company that produces medical cannabis and operates medical marijuana dispensaries, raised $35.4 million in a private placement led by MainLine Investment Partners.
It’s one of the largest investments in a Tampa Bay company so far this year.
Marijuana-related ventures are drawing a lot of investor interest, as more states lift legal restrictions on the use of products, Entrepreneur reported in March. About $1.23 billion was raised by medical marijuana companies in just the first five weeks of 2018, Entrepreneur said, citing the Viridian Cannabis Deal Tracker.
AltMed will use the funding to build out 25 authorized dispensaries, Matthew Duffy, president and chief operating officer, said in a press release. The company also plans to pay off debt, speed up the expansion of its cultivation capabilities and increase its footprint in Arizona, where it has one dispensary and a cultivation center, and wholesale distribution.
The Sarasota County Commission voted earlier this month to allow AltMed to open a dispensary at 5077 Fruitville Road. The company expects to open six dispensaries over the next several months, and 25 over the next couple of years, Duffy told Tampa Bay Business Journal.
AltMed also is a significant investor in Plants of Ruskin, with a production center in Apollo Beach.
AltMed’s approach to the market is based in science, said Duffy, whose background is in the pharmaceutical and biotech arenas, and in investment banking.
“Our goal is to have the bast-in-class products for patients in Florida and beyond,” he said. “Our chemists and research development folks spend a lot of time looking for the best products….They look a lot like what doctors and patients are used to seeing for medicine.”
AltMed’s products include a metered inhaler, similar to those used by patients with asthma, as well as transdermal patches, gels an creams, he said.
AltMed talked to a wide range of potential investors during its capital raise, he said. MainLine was impressed with what AltMed had accomplished in Arizona and the potential in Florida.
It’s one of the first medical cannabis investments for MainLine Investment Partners, which is based in Wynnewood, Pennsylvania, in suburban Philadelphia, and historically has invested in real estate assets and operating businesses.
In March, MainLine signed a memorandum of understanding with Thomas Jefferson University in Philadelphia, which created the Lamber Center for the Study of Medicinal Cannabis and Hemp, and is one of the first academic institutions in the United States to move aggressively into the cannabis space, the Philadelphia Inquirer reported.
“We see our investment in AltMed as a rare opportunity to gain a strong foothold in a once in a generation new growth industry,” William Landman, managing principal of MainLine Investment Partners, said in the press release. “AltMed has demonstrated that they are and will be industry leaders in Florida, Arizona, nationally and globally.”
AltMed already is providing gains for shareholders of CannaRoyalty Corp., which invested $1.5 million in AltMed in 2015. Following MainLine’s investment in AltMed, the post-money valuation represents about 215 percent growth in value for CannaRoyalty shareholders, that company said in a separate release.
The MainLine investment in AltMed is larger than the $12.4 million raised by Clearwater software developer Tops Software, and the $10.3 million raised by digital health company Peerfit. The Peerfit funding was the top local deal in the MoneyTree Report from PricewaterhouseCoopers and CB Insights for the first quarter of 2018.