Investments in the legal cannabis industry are up from last year, with nearly all capital being raised by companies in North America.
In the latest evidence of 2016 being a banner year all around for cannabis, a new report from Viridian Capital Advisors calculates that more than $1 billion was raised by the cannabis industry last year.
The investment firm, which regularly monitors capital raise, merges and acquisition, joint venture, and licensing activity in the legal cannabis industry through its Cannabis Deal Tracker report, tracked a total of 312 capital raises totaling $1.16 billion. Of those companies, 245 were public and raised $896 million, while 67 were private and pulled in $272.1 million in funding.
Companies in North America – including the United States and Canada — raised the bulk of the capital. The top sector, accounting for most of the capital, was cultivation and retail. Biotech and pharmaceutical-related enterprises, however, finished just shortly behind in capital raised.
Biotechnology companies like AXIM® Biotechnologies, a Medical Marijuana, Inc.’s investment company, saw an incredible year of growth. Late in 2016, AXIM® Biotech announced it has secured investment funding for clinical trials on nearly a dozen unique cannabinoid-based treatments. Medical Marijuana, Inc. and AXIM® Biotech were both recently included in a High Times Magazine article that highlighted the top 10 most successful cannabis companies.
Investment focus has expanded since November 8, when voters in eight states approved marijuana measures. Since Election Day most investments have gone to facilities or land purchases necessary for producing, manufacturing and selling marijuana, including dispensaries and grow operations.
“Since the election cycle, the deal flow has mostly been in the real estate sector and principally in California and Massachusetts,” Scott Greiper, president and founding partner of Viridian, told Forbes. Greiper believes that real estate is a less risky and more familiar market for investors.
According to the Veridian report, many sectors involved with the cannabis industry – agriculture technology, consulting services, cultivating and retail, hemp, and real estate – raised more capital in 2016 than the previous year. While Viridian doesn’t publish year-ahead forecasts, the company is optimistic that real estate and biotech and pharmaceutical-related enterprises will remain as the top sectors in 2017.
While there has been some investment trepidation regarding the new administration adding another element of risk, Greiper told Forbes that investors don’t seem to be too concerned about proposed attorney general Jeff Sessions, despite that he’s historically been a harsh opponent to cannabis.
“We have not seen a slow down in deal flow since Sessions name came up and we have not seen a slow down in investing,” said Greiper.
Investors are also betting on companies in Canada, where medical marijuana is legal nationally and recreational marijuana is slated for legalization later this year. Following the release of the recommendation report by Canada’s Task force on Cannabis Legalization and Regulation in December, the licensed cannabis producers closed the year with large financing rounds. This included a C$60 million raise by licensed producer Canopy Growth Corp. in December, the largest raise by a producer for the year.
“Publicly traded licensed producers are the largest deals in Canada,” Greiper told Forbes. “Another thing we’re seeing is underwriters there are buying deals and then selling it to their investor network. You don’t see this very often in the U.S.”
You can read the entire report from Viridian Capital Advisors, here.
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