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Back to blog July 17, 2019 No Comments Author: Andy Jones

Private Equity Investing in Cannabis Companies

As the legality of cannabis has shifted over time in some U.S. states, a few private equity firms have made investments in the cannabis industry. I thought it might be interesting to see how they have invested in this space and which firms have made those investments.

Below are private equity backed cannabis transactions from our M&A Research Database at PrivateEquityInfo.com.

Salveo Capital

November 2018 – Harborside raised approximately $26 million USD in a Series B Convertible Debenture financing. The lead investor in the financing was Navy Capital, with participation from Tidal Royalty Corp., Salveo Capital, and other investors.

 

December 2018 – Ascend Wellness raised a $40 million equity fundraising round. Poseidon Asset Management, Salveo Capital, JM10 Partners and Shire Capital Advisors led this funding round.

 

  • Headset is an analytics service provider for the cannabis industry.

January 2017 – Headset, Inc. closed $2.5 million in financing. Hypur Ventures and Salveo Capital partnered with Headset to provide a deeper, richer set of tools for the emerging market.

2019 – Headset raised $12 million for expansion, with Canadian marijuana giant Canopy Growth Corp. acquiring a key stake.

 

  • PathogenDx is a provider of DNA-based pathogen testing kits for the cannabis, botanical, food and agriculture industries.

July 2018 – Salveo Capital acquired a minority equity interest in PathogenDx. Salveo is participated in the funding round with firms that included Altitude Investment Management, Panther Opportunity Fund, Canopy Ventures, Tendaji Investments, PB Venture Group, Halley Venture Partners and FlatIron Group.

 

  • Treez offers an enterprise retail management software platform that serves cannabis dispensaries.

September 2018 – Treez closed an oversubscribed $11.5 million Series A funding.

 

Merida Capital Partners

  • Simplifya is a Cannabis compliance software company.

January 2018 – Simplifya raised a $1 million Series B financing from Merida Capital Partners.

December 2018 – Simplifya secured $3 million in Series C funding, led by Merida Capital Partners.

 

  • Kush Bottles is a provider of packaging, supplies, vaporizers, accessories and branding solutions for the regulated cannabis industry.

February 2018 – Kush Bottles, Inc. (OTCQB: KSHB) entered into a strategic partnership and received a $6 million equity investment from Merida Capital Partners.

 

  • MainStem Goods & Services is a technology company that also sells products, with a procurement management platform used by the commercial indoor and outdoor cannabis industry to procure their business supplies including packaging, grow supplies and traceability hardware.

May 2018 – Merida Capital Partners invested in MainStem Goods & Services.

 

Merida Capital Partners & Pegasus Capital Advisors

  • VividGro (LSG), a spinout from Lighting Science Group Corporation (LSG), offers products based on LSG’s origins in developing lighting for NASA and the International Space Station and currently focuses on distributing controlled environment agriculture (CEA) LED lighting solutions and services to the indoor horticultural and cannabis industries.

August 2018 – VividGro, LLC, a spinout from Pegasus-funded Lighting Science Group Corporation (LSG), tapped Merida Capital Partners as its strategic partner. VividGro will initially be funded by investments from LSG and Merida Capital.

 

Northwood Ventures

  • Acreage Holdings is a vertically integrated, multi-state operator of cannabis assets.

2018 – Northwood invested in a growth equity round in Acreage Holdings.

November 2018 – Acreage Holdings completed its public offering, raising an additional $300MM, on the Canadian exchange. (CSNX: ACRG.U; OTC: ACRGF)

 

Orkila Capital

  • Cannamedical is an independent cannabis wholesaler and distributor in Germany.

January 2019 – Cannamedical Pharma GmbH received a €15 million equity investment from Orkila Capital LLC.

 

Privateer Holdings

December 2017 – Privateer Holdings acquired The Goodship.

 

Serruya Private Equity

  • Liberty Health Sciences (dba Aphria USA) is committed to producing pharmaceutical grade marijuana of the highest standard for patients while optimizing returns to their shareholders. Liberty is focused on becoming the leading cultivation and distribution network through low-cost product and high-end dispensaries. Liberty was launched to acquire and operate U.S.-based companies in the medical cannabis market.

April 2017 – Serruya Private Equity led the investment in Liberty Health Sciences which will operate under the brand Aphria USA.

 

Tress Capital

October 2018 – Tress Capital acquired Turning Points Global.

 

 

Editor’s Note – I was reluctant to publish this industry study, given the controversial nature surrounding cannabis. While I find most business industries quite interesting, this one has some unusual twists, given the changes in legality, state vs. federal regulations and the general ebb and flow of the population’s view on the entire topic of cannabis. That said, I also feel compelled to say I am not a user of cannabis, nor I have I ever been… but it’s still one of the most interesting industries to follow, given the political, legal and controversial nature of the product itself. This industry transition also produces a rare case study of the effects of competition and free markets on product pricing.