As of March 25th, 2019, there are 177 public cannabis companies.
As of March 2019, 8 banks are lenders to cannabis companies. Banks lending to marijuana companies are located in the US and Canada. The list of banks used by cannabis companies includes:
A popular way for cannabis companies to gain exposure is to be featured in marijuana industry news websites.
In February 2019 the top 5 portals bringing visitors to the cannabis industry has the following digital advertising traffic share distribution:
However, only 2 sites concentrate the paid search advertising traffic, with 54.72% and 45.28% respectively.
As of March 26th 2019, 177 cannabis companies have gone public. However, most companies have been listed fairly recently, and thus only 29 companies record figures of Revenue % Growth 3 Year CAGR (Compound annual growth rate, Fiscal Year). The top performer is MedMen (CNQ: MMEN) with 1,133.52%, and the lagger is MJardin Group (CNQ: MJAR) with -84.20%. The most recent announcements of initial public offerings are Hightimes and Greenlane, which filed a registration statement for IPO on March 2019.
Companies operating in the marijuana industry are beginning to use services from traditional banking, such as lending. The highest debt amount, $61.3M, was issued on January 2019 to Pharmhouse JV in Canada. Cannabis companies that have successfully opened bank accounts in the US and Canada operate mainly in the following business activities:
Both public and private cannabis companies have successfully secured debt backing, although the lender is not always a bank. Medical Marijuana (OTC:MJNA) received debt financing of $2 million from Lotus Capital on August 14, 2012. Hygea (MJardin Group Inc) raised $5 million in the form of a
revolving credit line from Fifth Third Bank on December 22, 2014; later on April 27, 2015, the company announced that it tripled its revolving line of credit with Fifth Third Bank, from $5 to $15 million.
Banking institutions can invest as limited partners in cannabis companies. One of such banks is Mizrahi Tefahot Bank (UMTB), a banking institution based in Ramat Gan, Israel. The bank offers a complete range of international, commercial, domestic and personal banking services. Additionally,
the bank provides investment banking, mortgages and financial management services. The bank operates in Israel and abroad, with branches or representation internationally in eight countries in Europe and the Americas. The assets of the firm are managed by the executive management team.
In the case of US companies, in the context of EBITDA, taxes include state and federal income tax.
The following are key metrics for the Earnings Before Interest, Tax, Depreciation, & Amortization of public cannabis companies (Thousands, USD March 26th 2019):
Two companies operate in the payroll business in the marijuana industry.
Sagely (Financial Services), is a provider of financial services intended to provide professional finance, accounting, and business operations services to rapidly growing cannabis startups. The company’s services specialize in providing bookkeeping, accounting, financial statement, sales, tax filings, expense reporting, payroll taxes, benefits management, new hire on-boarding, worker compensation, budgeting, stock administration, investor reporting and analytic services, enabling cannabis entrepreneurship to optimize operations and make well-informed business decisions.
Wurk, is a developer of a payroll and human resources platform designed to provide workforce management for under-served cannabis businesses. The company’s platform allows employers to protect and streamline their operations, while automating the most complicated and risk-prone processes associated with recruiting, scheduling, and paying employees, enabling clients to fortify, comply and thrive in the face of uncertain regulatory
As of March 2019, there are 505 cannabis companies in Canada. Those companies have closed 993 deals, with the largest deal $3.89B. A total of 341 investors have invested $22.60B. There have been 402 exits. In Canada, Cronos Group (TSE: CRON) has raised the most capital, $3.71B. The top Canadian cannabis investor is Aurora Cannabis (TSE: ACB) (14 deals). The largest Canadian cannabis public company by market cap is Canopy Growth (TSE: WEED), $15.27B. The most valuable private cannabis company in Canada is MPX Bioceutical, with a post valuation of $835M. The top acquirer in
Canada’s cannabis market is Invictus MD (TSX: GENE), with 11 deals.
As of March 2019, there are 1218 cannabis companies in the United States. Those companies have closed 1699 deals, with the largest deal $850M. A total of 770 investors have invested $10.56B.
There have been 525 exits. In the US, Acreage Holdings (CNQ: ACRG.U) has raised the most capital, $433M. The top US cannabis investor is CanopyBoulder (43 deals). The largest US cannabis public company by market cap is Charlotte’s Web Hemp, $1.78B. The most valuable private cannabis
company in the US is Cura Cannabis Solutions, with a post valuation of $900M. The top acquirers in the US cannabis market are EVIO Labs (PINX: EVIO) and MedMen (CNQ: MMEN), with 9 deals each.
The calculation methodology for cannabis companies depends on the deal type:
A. If the post valuation is for an IPO (initial public offering) round
THEN it should be calculated as such: (total outstanding shares) x (IPO price per share)
B. If the post valuation is for an M&A (merger and acquisition) or PE (private equity) transaction.
– Transaction amount / percent acquired
– Round amount / percent acquired
C. If the post valuation is for a venture financing
– Post valuation = pre-money valuation + total equity invested
As of March 2019 there are 30 companies with an enterprise value above $100M. Cronos Group (TSE: CRON) raised the most capital ($3.71B). A notable new entrant is TILT Holdings (CNQ: TILT), founded in 2018, which raised @152.02M.
A cannabis business is a company involved in the production, retail distribution, technology, therapeutics, business solutions, or the development of consumer products related to marijuana. This includes dispensaries, laboratory testing equipment and services, medical cannabis, cannabinoid-based pharmaceuticals, vaporizers and accessories, cultivation, and online content and
networking related to marijuana.
Investment decisions should be considered in the context of risk and stated preferences, such as preferred investment horizon. Each deal type (Private equity, venture capital, debt) has a particular risk profile. During the first quarter of 2019, there were 29 deals in those categories in the cannabis industry, with median capital invested of $10M, median pre-money valuation of $2.3M, and median post valuation of $40.65M. In total, 173 limited partners have taken part in cannabis industry deals, including notably risk-averse institutional investors. Late stage investments and IPOs have a more moderate risk profile, although the exposure to regulatory headwinds remains.
As of March 2019, 18 banks appear as service providers to the cannabis industry. Banks are divided in Investment Banks and Commercial Banks. The investment banks serving the marijuana industry are mostly based in New York, and the commercial banks are located in California, Canada, Chicago, Ohio, and Sweden. Cowen and Company (NY) is the investment bank that has served most deals, a total of 12 deals and 4 different companies. Regarding commercial banks, Fifth Third Bank (Cincinnati) and Canadian Imperial Bank of Commerce have both served 2 companies and 2 deals.
As of March 26th, 2019, 43 companies are out of business. That represents 104 deals by 27 investors.
The total capital invested was $27.29M, the largest deal was $9M. 40 of the companies that did not survive were located in North America, and 3 in Europe. The industries where those failed cannabis companies operated (the ones with higher like hood being liquidated), ordered by total capital
1) Other Pharmaceutical and Biotechnology (most capital lost)
2) Drug Delivery
3) Internet Retail
4) Diagnostic Equipment
5) Electronic Components
6) Media and Information Services (B2B)
7) Business/Productivity Software
8) Consulting Services (B2B)
10) Financial software
11) Medical supplies
12) Other Services (B2C Non-financial)
13) Distributor/Wholesale (B2C)
14) Social/Platform Software (less capital lost)
There are 94 profitable companies in the cannabis industry, as of March 2019. Profitable public marijuana companies include Aurora Cannabis (TSE: ACB), Cronos Group (TSE: CRON), and, Aphria (TSE:APHA). Profitable private marijuana companies include Cura Cannabis Solutions, Privateer Holdings, and, STWC Holdings. Investors in profitable cannabis companies (91 in total) include Alumina Partners, Mentor Capital (PINX: MNTR), and, Invictus MD (TSX: GENE). There have been 87 exits from profitable cannabis companies, the largest deal was $2.15B.