The Bengal Bite 🐯 | "Canna"nomics | December 11, 2020
There has been a flurry of market activity in the cannabis space, suggesting that financial markets might once again be warming up for cannabis operators. This past week brought an RTO, M&A, another SPAC merging with an iconic cannabis brand, and the opportunity to watch the supply and demand “canna”nomics of the industry at play in public markets.
This week's Bite:
Market recap: Needham & Company overviews how multi-state operators (MSOs) fared in 2020 (very well) and share their outlook on 2021 (very excited). (Needham)
The next big RTO: Verano is undertaking a reverse takeover (RTO) that will value the company at $2.8 billion, making them the fifth largest MSO by valuation on the Canadian Stock Exchange. (Bloomberg)
Cannabis is "the next great American growth story": Green Thumb Industries (GTI) CEO, Ben Kovler, shares his thoughts on how execution is key for continued success in 2021. (Advisor Shares - Video)
Where can I find the nearest SPAC? Weedmaps, the dispensary directory and online cannabis product review company, prepares for a $1.5 billion public listing. (Reuters)
LeafLink inks Series C: With a round led by venerated venture capital firm Founders Fund, LeafLink raised a $40 million round to drive future expansion. (TechCrunch)
Read more below:
Multi-State Operator quarterly recap - 3Q20
2020 was an “outstanding” year for U.S.-based MSOs with strong growth rates and improved margins. Looking to 2021, Needham shared an optimistic view, “We can point to no macro, regulatory, or fundamental factors that would materially alter the pace of revenue growth, and we expect continued improvement in operating metrics into 4Q and '21.” Moving forward, they see “capital raising activity over the next few months required to sustain growth.”
U.S. cannabis firm Verano to go public with $2.8B valuation
On the heels of its acquisition of AltMed, Verano has begun the reverse takeover process in order to list on the Canadian Stock Exchange. This listing would break a logjam that has seen relatively little cannabis-related IPO activity the past year. In the first 48 weeks of the year, $2.1 billion was raised by publicly traded cannabis companies, less than half of the $5.6 billion raised in the same period a year ago, according to Viridian Capital Advisors, a cannabis advisory firm.
MSOS update with Todd Harrison and Ben Kovler (GTII)
Following a strong Q3 earnings report, GTI CEO Ben Kovler speaks with Todd Harrison from CB1 Capital about Prohibition 2.0, potential industry catalysts on the horizon, market risks, and why cannabis investing is “the next great American growth story.” With each new market that legalizes, Mr. Kovler sees a multi-billion dollar opportunity and remarks that the most important factor in taking advantage of this “monstrous” opportunity is operational expertise and execution. Watch the full video interview here.
Cannabis review site Weedmaps agrees $1.5 billion deal to go public
Weedmaps said on Thursday it has agreed to go public through a merger with special purpose acquisition company (SPAC) Silver Spike Acquisition Corp. Shares of Silver Spike surged 40% after the deal was announced.
LeafLink raises $40m from Founders Fund, others to cultivate its cannabis wholesale market
With it’s latest Series C raise, LeafLink demonstrates the increasing appetite for cannabis investment. Founders Fund, which has invested in companies such as Airbnb, Stripe, SpaceX, Facebook, and Spotify, led the round and shared why they are excited about the company, “the U.S. appears to be on a path to full federal legalization over the next few years. We believe we’ll start to see some massive success stories in the cannabis space as regulations change and that LeafLink will be one of the winners,” said partner Napoleon Ta.