Smoking Hot — A Look at February’s Cannabis Deals

Near the end of February, White House Press Secretary Sean Spicer, said President Donald Trump respects the benefits of medical marijuana. However, Spicer added that he expects to see the Justice Department, under newly confirmed Attorney General Jeff Sessions, crack down on recreational marijuana. Sessions later confirmed his dislike for marijuana, and his doubt, despite some studies, that it may benefit opiate addicts. Nonetheless it’s unclear if he will crack down on state-legal marijuana businesses.

While there was some uncertainty in the U.S., business continued. Here’s a run-down of notable February deals:

-Publicly-traded Canadian Producer Aurora Cannabis raised C$75 million in what it’s calling the largest raise yet in the country. The previously unannounced deal was led by Canaccord Genuity Corp. Other investors included Cormack Securities, Eight Capital, Mackie Research Capital Corp. and GMP Securities L.P. The company, which trades on the Toronto Stock Exchange under the ticker ACB, operates a 55,200 square foot facility in Alberta and is building an 800,000 square foot facility at the Edmonton airport.

-Publicly-traded Canadian producer Aphria Inc. said it received a C$50 million investment from Clarus Securities, with an option for Clarus to invest an additional C$7.5 million. The company also said it would be uplisting from the TSX Venture Exchange to the Toronto Stock Exchange. The company is the first licensed producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters. The company trades under the ticker APH.V.

-Vertically integrated Colorado cannabis company The Green Solution, said it had raised a $7.5 million loan facility from iAnthus Capital Holdings (CSE:IAN) with the expectation that the entities will collaborate on The Green Solution’s efforts to franchise the brand in other states. The Green Solution currently has 12 retail outlets in Colorado with plans to open 5 more this year. It generated more than $50 million revenue in 2016.

-Trading in Cannabics Pharmaceuticals attracted regulatory attention after the stock climbed to an all-time high of $7.60 per share, after generally trading for less than $1. Analyst Alan Brochstein at 420 Investor attributed the spike to momentum trading stating that he believes it is a “worthless” company. “I expect that the stock will ultimately return to where it started, perhaps even lower, as at a price of $0.20, with a market cap of $23mm, the valuation would still not make sense.”

-Vancouver-based Namaste Technlogies which claims to be the world’s leading e-commerce site for vaporizers entered a deal to acquire Australian Vaporizers for about C$5.5 million, to gain market share in the Asia-Pacific region.

-Tokyo Smoke, a Toronto-based lifestyle brand founded by Google alum Alan Gertner announced that it is acquiring Seattle accessories company Van Der Pop. Tokyo Smoke has developed four branded strains in combination with the producer Aphria (which just raised $50 million. The tie up comes shortly after Tokyo Smoke announced a $3 million capital raise. Terms of the deal were not announced.

-Front Range Biosciences, a start-up that provides tissue culture propagation and advanced breeding services that aim to yield healthier more robust plants raised $1.5 million. Investors in this seed round include Intuitive Private Equity, Salveo Capital, Sand Hill Angels, Harvard Business School Angel Alumni of New York and New York Angels. Front Range came out of the Canopy cannabis business incubator.

-Following a 236% rise in cannabis stocks in 2016, ETF Managers Trust has filed to create the first cannabis Exchange Traded Fund. The fund, to be called Emerging AgroSphere ETF aims to track global companies involved in legal medical research and synthetic CBD for pharmaceuticals. It is not currently considering recreational marijuana companies.