According to a Viridian Cannabis Deal Tracker report outlined by Bezinga, investments in the cannabis space have increased 600 percent over the first five weeks of 2018 compared to the first five weeks of 2017.
In the first five weeks of 2017, cannabis industry investments reached $178 million, while this year they have already swelled to $1.23 billion, according to the report. The 65 capital raises so far this year more than double last year’s totals.
- The average size of the raises was $19 million. In 2017, the average raise over the first five weeks was $5.9 million
- 75 percent of the raises went to public companies, a 4 percent increase over last year.
- Private firms raked in $300 million over the first five weeks – a six-fold increase over the first five weeks of last year.
- 6 percent of these raises were equity-backed, compared to 70 percent from last year
- Nine raises hit more than $50 million
Viridian Capital Advisors’ Vice President Harrison Phillips indicated that the investments have been largely driven by Canadian companies as the nation moves toward federal cannabis legalization – expected this summer.
“Historically, it was mid-to-high-teens; today we are seeing far lower interest rates, especially for companies with a long operational histories or strong balance sheets. We’ve seen some debt-back raises now done with interest rates in the mid-to-high-single digits. That shows material improvement in the comfort levels of the investors getting into the space.” – Phillips to Bezinga
The largest investments were made in cultivation and retail (about $700 million) followed by investment firms (about $320 million), and real estate (about $90 million). Investments in biotechnology and pharmaceutical companies – which led the way last year – has shrunk by about half.
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