Marijuana Business Magazine November December 2018

B¬G H¬TS Cresco Lands $100M, Gets Institutional Money Chicago-based cannabis company Cresco Labs closed a $100 million funding round that attracted institutional investors, a notable milestone for cannabis finance in the United States. The vertically integrated company’s raise represents the second-largest deal inked in the U.S. marijuana industry to date. New York-based Acreage Holdings’ $119 million raise in July holds the top spot for private funding deals. Unlike Cresco, that deal relied on money from high-net-worth individuals and family offices from around the globe. A “vast majority” of Cresco’s raise included investments from Canadian, European and U.S. institutional investors – including investment banks – and capital funds set up for cannabis, CEO Charlie Bachtell said, without going into detail. MedMen Completes $67 Million Equity Financing Deal Los Angeles-based MedMen Enterprises completed a $67 million (CA$86 million) raise through a bought-deal equity funding. The company plans to use the money to expand its U.S. retail footprint and to bankroll cultivation and production facilities. Toronto-based Eight Capital and Cormark Securities served as co-lead underwriters. Canndescent Lands $13 Million California marijuana cultivator Canndescent closed a $13 million Series C convertible funding to help finance the company’s expansion into new state markets. The company also will use the money to bankroll a second cannabis brand and new product lines. Canndescent, which already specializes in pre-rolled joints and premium cannabis flower, plans to expand into the vaporizer and edibles markets within the next year. Oregon Company Gets $12.5 Million Oregon-based Diem Cannabis is poised to enter a new market after landing upwards of $12.5 million from Toronto-based Tidal Royalty, a provider of royalty financing to the cannabis industry. The capital will be used over the next three years to develop and operate a large- scale cultivation and processing facility and up to four dispensaries, all in Massachusetts. Cannabis Tech Firm Treez Inks $11.5 Million Funding Treez, an ancillary cannabis tech company based in Oak- land, California, raised $11.5 million to help fund its expan- sion. The company offers a point-of-sale software system that currently serves more than 100 MJ retailers. Treez said the $11.5 million represented an “oversubscribed” Series A funding. That brings to $15 million the amount of money the company has raised in total investments. MJ Freeway Raises $10 Million Denver-based MJ Freeway, a point-of-sale system and government traceability software provider for the cannabis industry, completed a $10 million raise. The company plans to use the funds for technological build-outs focused on new product features for busi- nesses and governments, according to a news release. The Series C raise – which was oversubscribed – was led by New York-based venture capital firm Batu Capital. Cresco Capital Partners, a Dallas-based marijuana invest- ment firm, also “participated significantly.” Number of Note: 84% While the cannabis investment climate is improving, roughly 84% of MJ entrepreneurs report using their own savings and personal debt to launch their ventures, according to a survey conducted by Marijuana Business Daily and published in the Marijuana Business Factbook 2018. The second top source of funding is investment from friends and family, according to 26% of survey respondents, while 11% of respondents said they were able to land funding from angel investors. Q What’s your biggest investment mistake, and how did you overcome it? A As a public company, we have to do a lot of research and due diligence before making an investment and simply can’t afford to make mistakes. If we see something problematic, we have to end that deal. One of the most important steps in the process is to make sure that company’s financials are in order and can be audited. We’ve attempted to make deals with companies in the past that we were really excited about and that seemed to have a great opportunity ahead of them. But once we got into it, we realized that there was no organization and the financials were a mess, which ended up being a waste of time that could have been used pursuing better opportunities. 12 • Marijuana Business Magazine • November/December 2018