Cannabis Deal Tracker - Week Ended November 1st, 2019
Capital raise activity reached a new low (with only 2 transactions last week vs. 22 transactions in the prior year period) and remains well below normal historical levels as the retrenchment in public and private market valuations is causing both issuers and investors to recalibrate.
Leafly, one of the oldest cannabis companies, raised debt to continue to grow operations as it cuts costs in order to operate more efficiently in a market where fundamentals are increasingly a part of the investor conversation.
Infused products makers with strong brands and definable market share continue to attract capital as is exemplified by 1906 raising $18 million to fuel growth.
Mergers & Acquisitions
Mergers and Acquisitions activity also slowed considerably (with only 2 transactions last week vs. 7 in the prior year period) as the most traditionally active acquirers (publicly traded MSOs and Canadian LPs) are in a weakened position due to declining stock prices and reduced cash balances.
We continue to see multi-state operators acquire assets in new geographies to expand footprint and more importantly strengthen the balance sheet. We are seeing a shift from a focus of expansion of footprint to a strengthening of balance sheets by acquiring assets with established revenue and earnings.
International expansion remains a focus for Canadian companies which are experiencing an oversaturated Canadian market. Europe is a focus with Germany at the lead as a result of its large, affluent population.