Cannabis Deal Tracker - Week Ended October 25th, 2019
Raising capital remains challenging as balance sheets are weakened and a sense of fear enters the market with the cannabis markets resetting to more reasonable valuations. There were only 4 deals this week which is significantly less than the 23 for the same week last year.
This downtrend so far in Q4’2019 continues the weakness we saw in Q3’2019.
Cronos is expanding to Australia as international expansion continues to be a focus.
The passage of the farm bill earlier this year has been a catalyst for CBD infused consumer packaged goods. We are starting to see an uptick in investment as companies start to gain traction.
Mergers & Acquisitions
CBD infused products are becoming a focus as hemp/CBD companies continue to build traction.
Mergers and acquisitions remain slow as public cannabis companies work with lower stock prices and weakened balance sheets.
We are starting to see more sale-leaseback agreements as vertically integrated companies move real estate off of their balance sheet to gain operating capital. Debt has traditionally been challenging in cannabis industry and sale-leasebacks provide very valuable liquidity in the absence of institutional debt.
This downturn in M&A transactions was first seen and reported by Viridian in Q3 of this year, which represented the first significant downturn in transactional activity.
Marimed purchases two Illinois dispensaries branded as Thrive to expand national footprint. We continue to see multi state operators purchasing assets to expand their footprint in attractive states. Illinois is a particularly attractive geography as they move to a recreational market in 2020.