16/4/2020 Cannabis M&A Dries Up Amid COVID-19 Pandemic, But Raises Don't Stop

Cannabis M&A
Dries Up Amid
COVID-19
Pandemic, But
Raises Don't Stop
Viridian Capital Advisors
Benzinga April 9, 2020

The Viridian Cannabis Deal Tracker is an information service

that monitors capital raise and M&A activity in the legal cannabis
industry. Each week the Tracker analyzes/aggregates all closed
deals and allocates each transaction to one of twelve key
industry sectors in which the deal occurred (from Cultivation to
Brands), the region in which the deal occurred (country or U.S.
state), the status of the company announcing the transaction
(public vs. private) and the type of deal structure (equity vs.
debt). The Viridian Cannabis Deal Tracker provides the deal
data/terms/valuations/structures and market intelligence that
cannabis companies, investors, and acquirers utilize to make
informed decisions regarding capital and M&A strategy. Since its
inception in 2015, the Viridian Cannabis Deal Tracker has
tracked and analyzed more than 2,500 capital raises and 1,000
M&A transactions totaling over $45 billion in aggregate value.
Find it exclusively on Benzinga Cannabis every week!

INVESTMENT AND M&A ACTIVITY IN THE CANNABIS

INDUSTRY

3/30/2020 - 4/3/2020

CAPITAL RAISES

As was the case for the month of March, COVID-19

continued to negatively impact capital raises during the Week
of March 30 – April 3, in the midst of an already weak capital
raising environment for the cannabis industry.
We recorded 4 capital raise transactions totaling $38.6
million, vs. 14 transactions totaling $191.4 million for the
same period in 2019.
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16/4/2020 Cannabis M&A Dries Up Amid COVID-19 Pandemic, But Raises Don't Stop

All 4 cap raises were by companies in the Cultivation & Retail

sector. This sector has dominated investor interest for more
than 4 years, and in the midst of the COVID-19 pandemic,
has become an even more dominant sector at the expense of
the Hemp and Infused Product sectors which had been
attracting more investment capital towards the end of 2019.
We believe that this is due to the underlying asset portfolios
of Cultivation & Retail companies (real estate, manufacturing
facilities) that offer asset protection for lenders.
Three of the four transactions were debt-based financings,
continuing a predominant trend in the industry we’ve been
reporting on for the last year. Of these, two were convertible
note offerings which comprise the majority of debt financings
in the industry as lenders achieve the best of debt and equity
– a secured position with a current coupon, and the potential
upside of converting into equity. We expect that debt-based
financing will continue to dominate the investor landscape as
depressed equity valuations make it prohibitive for
companies to issue new equity.

MERGERS & ACQUISITIONS

We recorded 1 M&A transaction, vs. 14 in the prior year

period.
The slow market for M&A is a direct fallout from the decline in
the market valuations of public cannabis companies that
have been the predominant acquirers in the industry.
Weaker stock prices and a diminished ability to raise capital
has hurt the “buying power” of these public companies.

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