May Roundup: Investors Overcome Uncertainties & Inch Back Into the Market
Uncertainty remained the rule in the U.S. cannabis market after prohibitionist Attorney General enlisted Steve Cook, a former prosecutor and cop to review marijuana policy.
But after several months of fearing a crackdown investors started inching back into the market, led by two high net worth individuals who each said they would invest $100 million in the space.
Here are some of the notable deals from May:
Publicly traded packaging company Kush Bottles acquired CMP Wellness, a Los Angeles distributor of vaporizers and other accessories, in a $20 million cash and stock deal. Since its founding in 2010 Kush Bottles has sold more than 100 million bottles and retains an active base of more than 3,000 clients.
Canadian Bioceutical said it had signed non-binding letters of intent to acquire up to four operators in Maryland and Arizona, both of which have legalized medical use. One license is in Arizona while the other three are in Maryland: in Baltimore and the Washington D.C. suburbs. The Maryland licenses account for three of the 109 issued statewide in a market predicted to grow to roughly $150 million by 2020.
Teewinot Life Sciences, a producer of synthetic cannabinoids, closed an oversubscribed $12.3 million B round led by Tuatara Capital. New York-based Tuatara had also led Tampa-based Teewinot’s $7 million A round in late 2015. Tampa-based Teewinot says it can synthesize at least 18 separate cannabinoids at industrial scale. Founded in 2014, Tuatara now managed more than $100 million in cannabis focussed assets.
Washington State said it would make Franwell’s METRC its seed-to-sale tracking software beginning no later than October 31, 2017. The state had previously used BioTrackTHC. The METRC system was already in use in Colorado, Oregon and Alaska. Franwell was one of seven companies that submitted bids.
On the same day, a Florida lawyer and a California real estate entrepreneur separately announced plans to invest $100M in cannabis companies. In Florida, the investor is John Morgan, a wealthy personal injury lawyer and longtime cannabis activist. The Californian is Paul Daneshrad, founder and CEO of Starpoint Properties who said his new investment vehicle would invest the sum in the next 12 months.
Oakland-based cannabis breathalyzer company Hound Labs raised $8.1 million in venture capital funding; in a round led by Silicon Valley heavyweight Benchmark Capital. The firm is known for investments in Dropbox and Uber. Television writer Dick Wolf also participated. Hound Labs aims to standardize how law enforcement assesses whether drivers are impaired, a vexing problem with cannabis. Company CEO Dr. Michael Lynn is also an emergency room physician.
Social network MassRoots said it needs to raise $5M in the next year to stay in business. It expects to be able to raise most of that sum by exercising warrants. The company posted a $7.4 million loss for the quarter ending March 31, up from $2.6 million in the same period in 2016. Last year the company was rebuffed in its attempt to trade on the NASDAQ stock market..
Fund manager First Trust, an Illinois company with $100 billion under management, filed to create the first U.S. listed cannabis fund. The only Canadian traded fund has C$115 under management.
Canadian medical marijuana producer Aurora Cannabis acquired the German medical cannabis market leader Pedanios for C$20.9 million. Germany’s medical marijuana law took effect in March and Pedanios wholesales to more than 750 pharmacies in Europe’s most populous country.
Medicine Man Technologies announced it would acquire Denver Consulting Group in a $3.5 million stock deal. Started in 2014, Medicine Man is currently pursuing deals in which it supports struggling producers in exchange for the improvement the consultancy generates. Denver Consulting Group has offices in Denver and Portland, Ore., and active clients on both coasts and in the Midwest.