*Of the 11 capital raises, 9 (or 82%) were closed by public companies. So far in 2020, public companies have accounted for 77% of all capital raises, vs. 66% for the same period in 2019. In 2020, public companies have accounted for 88% of total dollars raised, vs. 72% for the same period in 2019. This is indicative that investors are choosing to invest in the cannabis sector through pubcos that offer greater liquidity. Also driving this increase is the recovery in cannabis stocks in general coming off of the lows reached after the initial impact of COVID-19.
*Of the 9 public company capital raises, all are Canadian exchange listed.
*Equity-based capital raises accounted for 6 of the 11 transactions, with debt-based financing accounting for the other 5 deals. This is now the third week in a row that we’ve seen an uptick in equity-based capital raises, reversing a nine-month trend where debt financings increasingly dominated the capital raising landscape. Once again, this is likely indicative of the fact that a number of public cannabis stocks bounced off of their lows after the initial impact on stock prices from COVD-19, leading more public companies to accept equity deals that became less dilutive.
*Of the 5 debt-based transactions, 2 were convertible note structures (which remain the dominant form of debt financing in the cannabis industry), with the other 3 transactions being non-convertible structures.
*We continue to see good diversity among the industry sectors that attracted capital as investors seem to be “spreading their bets” more that we’ve seen in prior years. The leading sector was Cultivation & Retail (5 transactions), followed by Hemp (2 transactions), Investments/M&A (1 transaction), Biotech/Pharma (1 transaction), Infused Products & Extracts (1 transaction), and Consulting Services (1 transaction).
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