April Roundup: Cannabis Deals Gain Momentum
April deal-flow showed signs of life as the threat of a crackdown by Attorney General Jeff Sessions appeared to recede. The annual 4/20 celebration of all things cannabis, and the accompanying bump in sales also raised spirits.
The biggest deals still tended to be found north of the border in Canada, where the major players operate with all the advantages of legal companies and national recreational legalization is expected next year. Here are some of the most noteworthy cannabis deals from April:
Canadian medical marijuana producer Aphria said it had raised C$100 million in financing. Of that amount, three quarters was equity financing and the balance came from debt through a five-year term loan. Proceeds from the deal will support finishing a major new production facility. The company also announced a major expansion into the U.S. market with a C$25 million acquisition of Chestnut Hill Tree Farm, a Florida nursery a licensed producer in Florida of low-THC medical cannabis.
Bay Area company Flow Kana reportedly spent $3.5 million to acquire an 80-acre winery in Mendocino County California. It expects to turn the site into a processing facility for locally grown artisanal cannabis. The move highlights the increasingly interconnected futures of California’s cannabis and wine industries.
Cannabis enterprise software company MJ Freeway won a five-year, $10 million contract from Pennsylvania to track medical marijuana inventory throughout the state. The announcement came after a difficult period for MJ Freeway. In January the company suffered a major outage, which it characterized as a malicious attack, though no charges have been announced and the company has provided few additional details. The Pennsylvania medical program, which is projected to top $100 million in annual sales, is expected to be operational in early 2018. In addition MJ Freeway announced that it had raised $3 million in Series B extension funding from existing investors Roger McNamee and Tao Capital Partners.
In Michigan, Franwell’s METRC system won the state’s medical marijuana tracking contract, worth approximately $450,000 according to Crain’s Detroit Business. To win the bid, Franwell also holds the contracts in Colorado, Oregon, Alaska and Maryland. It beat out MJ Freeway and about 10 other companies to win Michigan’s business.
Tampa, Florida-based Teewinot Life Sciences said it had raised $12.3 million in an oversubscribed Series B round led by Tuatara Capital. Teewinot has developed an array of products and services focussed on the biosynthetic production of cannabinoids for medical applications. The company claims to be able to produce industrial quantities of more than 15 distinct cannabinoids. Currently there is only a consumer market for THC and CBD. Tuatara previously led Teewinot’s $7 million Series A round in December 2015.
Canopy Growth, the Canadian medical marijuana producer considered the world’s largest legal marijuana company, announced that it is committing C$20 million to a new company called Canopy Rivers that will provide financial support to license applicants and licensed Canadian growers “in exchange for a contracted stream of future cannabis production.”
Vancouver-based Namaste Technologies which claims to be the world’s leading e-commerce site for vaporizers, said it will acquire Canadian production license applicant CannMart in a bid to expand into medical cannabis distribution. The deal values CannMart at C$3.55 million. In February Namaste announced plans to acquire Australian Vaporizers for about C$5.5 million, to gain market share in the Asia-Pacific region.
Tikun Olam, which became Israel’s first medical marijuana producer in 2007, announced plans to license its brand in the U.S. Initially the strains will be available in Nevada through Tikun Olam’s partnership with CW Nevada.
Wurk, a software platform designed to keep cannabis businesses in compliance with state regulations, said it had raised $2 million to bring its total seed round to $3 million. Poseidon Asset Management led the raise — that also saw participation from Phyto Partners, Salveo Capital, and the ArcView Investor Network.