Canadian marijuana companies raised landmark CA$12 billion in 2018

Marijuana firms in Canada raised a record 11.96 billion Canadian dollars ($9 billion) last year as they prepared to meet demand in the new adult-use market and grow their medical operations globally.

That represents a 150% increase over 2017, when Canadian companies raised CA$4.7 billion, according to data compiled by Viridian Capital Advisors and shared with Marijuana Business Daily.

The capital raises include everything from deals related to going public on stock exchanges to private placements, equity, debt and strategic investments.

In 2017, Canadian MJ firms were involved in 245 capital raises, averaging CA$9.87 million, but those figures spiked last year to 383 deals worth an average of CA$30.85 million.

Despite the increase, capital is increasingly selective and strategic, said Harrison Phillips, vice president of New York-based Viridian.

“What we saw is a shift from funding any licensed entity to focusing on licensed entities, as well as funding larger licensed entities,” he said.

“We saw a shift away from funding early and pre-licensed businesses.”

Harrison expects more capital to find its way to infused and edibles companies, as “infused products and extracts companies gain interest in the Canadian market,” he said.

Canada’s health department recently unveiled draft regulations for edible cannabis and infused beverages, extracts and topicals.

After those products reach store shelves by Oct. 17, 2019, they’re expected to make up an important part of the overall cannabis sector.

“Expect to see another resurgence (in capital raises) – but more into the companies that are differentiating themselves – this summer, once we have a couple quarters of financials,” Phillips said.

Cannabis funding is an entirely different story outside North America.

Overseas, medical cannabis companies raised $627.6 million in capital last year, a modest increase from 2017’s $519.1 million.

“There’s a lot of the world that’s left to get rid of cannabis prohibition. It’s likely to start – as it did in Canada and the U.S. – with a slow rollout,” Phillips said.

“As governments get more comfortable, they’ll put more support behind it.”

Matt Lamers can be reached at mattl@mjbizdaily.com

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