PRIVATE EQUITY INVESTING
In Cannabis Industry Companies
March 31, 2020 @ 8:00 am - 5:00 pm
For Savvy Cannabis Investors,
It’s Still Early Innings
For Finding Good Deals
Private Equity Investing in Cannabis Industry Companies
Investing in cannabis companies is a hot hand right now – especially considering that cannabis hasn’t even been legalized in much of the world.
In fact, some investors worry that cannabis investing may already have become TOO hot — valuations are steep, consolidation is well under way, major corporations are competing for deals — and meanwhile, unknown regulatory risks hover in the background.
- This year’s private equity deal volume is on pace to exceed 2018’s record levels, and signs point to that volume growing further – e.g., the North American cannabis industry is outpacing last year’s total of money raised, and as of July 2019 it had reached nearly $7.5 billion
- Mega-acquisitions are consolidating the industry. New York-based iAnthus is acquiring the U.S. assets of MPX Bioceutical in an all-stock deal valued at 835 million Canadian dollars. The firm is now in ten states, thereby nearly doubling its reach.
- Another large multi-state operator is Curaleaf, which employs 1300 people in 12 states and is acquiring Grassroots Cannabis for $875 million, making it the largest medical and adult-use cannabis company.
- Private equity firms have invested north of $100 million dollars and are actively raising even more capital.
- Some very big pension funds are looking at the support side of the industry. The New York State Common Retirement Fund and the Texas Permanent School Fund are among the investors in Innovative Industrial Properties, a publicly-traded fund that owns cannabis-growing facilities in multiple states.
Investors in regulated cannabis – as opposed to hemp or CBD – agree this game is still in the early innings, given such factors as –
- The potential size of the cannabis market. The legal cannabis industry’s economic impact in the U.S. was estimated at $20 to 23 billion last year. That impact could reach as high as $77 billion by 2022. In fact, 28% of alternative investment professionals in a recent poll cited cannabis as the industry with the best growth prospects!
- The complexity of the current patchwork of state, national, and international regulations, leaves plenty of mismatches where capital is needed. For instance, in states where legalization seems most likely, savvy investors are able to buy agricultural real estate ahead of new zoning laws. And in states where cannabis is already legal, there are opportunities to buy distressed companies as the market consolidates or regulation becomes more stringent.
- Opportunities to do multi-state roll-ups for better exit multiples as more states legalize cannabis, e.g., SOL Global’s combination of cannabis operations in Michigan and Florida, with involvement from Merida Capital.
- Barriers such as “vice clauses” in fund documents that prevent generalist PE funds with pension-fund backing from moving into this asset class.
Robert E. Hunt
Tuesday, March 31, 2019
8:00am – 5:00pm
Midtown Manhattan, NY
Register now to gain valuable insights as 20-plus speakers
assess the outlook for private equity investing in cannabis industry companies
at The Capital Roundtable’s all-day conference
on Tuesday, March 31, in Midtown New York City.
Three Key Reasons Why You Should Join Us
- Assess your risk tolerance and time horizon to understand which cannabis-related sectors (“plant-touching” versus ancillary) are right for your firm.
- Hear about the current status of international, national, and state-level regulation, and about where the next opportunities are likely to come.
- Understand the unique challenges of recruiting and managing talent in this new industry, which is sometimes compared to the “Wild West.”
- Valuation — what metrics to use and where to find comparables
- How “vice clauses” may delay the arrival of institutional capital
- What to know about the impact of federal bankruptcy laws around cannabis companies
- Minority stake versus buyout
- Small and nimble versus market leader
- U.S. deals versus Canadian deals versus deals in the rest of the world
- Medicinal versus adult-use M&A
- Plant-touching versus ancillary investing
- Opportunities for roll-ups and PIPEs
- Most likely exit routes, from strategic bidder to buyout to Canadian IPO
- Using options and other M&A structures to lock in deals at a later date, contingent on U.S. federal legalization
- What to expect during DOJ antitrust review
- What lessons Canadian legalization offers, including for bankers
- Next opportunities in Europe and Latin America
- State-by-state analysis of the U.S. opportunity
- Characteristics of a solid management team in the regulated cannabis industry
- New technologies, such as online marketplaces like Leaflink, so dispensaries can find product
- The likeliest LPs and lenders …
Recent Middle-Market Cannabis Deals
- Trivergance Investments bought a controlling interest in The Arcview Group, a cannabis industry investor network.
- Curaleaf Holdings agreed to buy GR Holdings (formerly Grassroots), a multi-state cannabis grower that had raised $90 million from undisclosed investors, for about $875 million in cash and stock.
- Jane Technologies, creator of an online cannabis marketplace, raised $21 million in Series B funding from Gotham Green Partnersand Delta Emerald Ventures.
- Merida Capital became a significant investor in Gabriella’s Kitchen, a U.S.-focused consumer packaged goods company operating brands in the cannabis industry and in the mainstream grocery channel.
- Northern Swan Holdings Inc., an investment firm focused on doing deals in the international cannabis industry, completed a $58 million Series D financing led by undisclosed global institutional investors.
- Demetrix Inc., a biotechnology company focused on the production of cannabinoids, secured $50 million in Series A funding led by Tuatara Capital with participation from existing investor Horizons Ventures.
- Jushi Holdings accepted $16-million in the form of cash, stock and convertible promissory notes from Dalitso LLC.
Rob Hunt is a founder of Linnaea Holdings, a private equity firm focused on rolling up California-based cannabis assets. Previously he was the founder of Shingle Hill, a boutique consultancy and market intelligence firm for the cannabis industry. He has more than 14 years of experience in cannabis as an attorney, consultant, operator, and investor. He has also launched other companies such as Tuatara Capital, the largest PE investor in Cannabis & Evergreen Garden Centers, which sold grow equipment to commercial cultivators. To date, Rob has exited seven cannabis-based investments.
This Capital Roundtable conference in midtown, New York City, is all-business, all-targeted, all-designed to be a completely focused day of practical information and revealing insights about cannabis industry companies. You’ll gain valuable insights from —
- Three informative panel discussions
- Two revealing keynote presentations
- Real-world perspectives from company investors
- Industry outlooks from noted sector experts
- War stories and lessons learned from experienced hands
- Robert E. Hunt, Principal, Linnaea Holdings
- Burt Alimansky, Chairman & CEO, The Capital Roundtable
Preliminary Speaker List
- Kaiya Bercow, Co-founder & Chief Executive Officer, Utopia Cannabis
- Nial DeMena, CEO, Manna Molecular Science LLC
- Michael Dundas, President, Sira Naturals Inc.
- Lincoln W. Eckhardt, Managing Director, FTI Consulting
- Nanette Heide, Partner, Duane Morris LLP
- Sean McNulty, Principal, XIB Financial Inc.
- Evan Nison, Founder, NisonCo
- A. Clayton Perfall, Operating Executive, Tailwind Capital Group LLC
- Tahira Rehmatullah, President, T3 Ventures
- Jonathan Sherman, Partner & Chair–Cannabis Industry Group, Cassels Brock & Blackwell LLP
- Tamara Totah, Managing Member, Flatiron Venture Partners
7:30am – 8:30am
Networking & Registration & Breakfast
8:30am – 9:00am
Welcoming Remarks & Audience Self-Introductions
9:00am – 9:30am
Conference Chair’s Introduction —
- Robert Hunt, Linnaea Holdings
9:30am – 10:15am
Morning Conversation —
What’s Next for Investing in the Cannabis Industry? Expansion by Geography, by Market, & by Application?
10:15am – 11:00am
Networking & Coffee
11:00am – 12:00pm
First Panel —
Due Diligence & Deal Structuring — Unique Challenges Cannabis Faces on the Road to Legality
12:00pm – 12:30pm
Morning Keynote — Who Wins and Who Loses in U.S. Cannabis Legalization?
- David Feldman, Duane Morris
12:30pm – 1:30pm
Networking & Luncheon
1:30pm – 2:30pm
Second Panel —
Licensed Cannabis Businesses — From Agribusiness to Branding, What Investors Need to Know
2:30pm – 2:45pm
Networking & Dessert
2:45pm – 3:30pm
Afternoon Conversation —
Addressing Regulations — Lessons Learned by Successful Cannabis Entrepreneurs
3:30pm – 4:30pm
Third Panel —
Ancillary Cannabis Business Opportunities & Sectors — Where to Invest with Mitigated Risk
Networking & Adjournment
Space at this conference is limited, so register as soon as possible to assure yourself a seat. To avoid disappointment, please contact Chris Agar today to confirm your attendance at 212-832-7300 ext. 0 or firstname.lastname@example.org.
Please note that Capital Roundtable limits the number of registrants from a single firm to three.
Best Rate – Early Registration
Save $300 off the standard fee of $1,495 when you register by Friday, February 13. Just $1,195.
Save $200 of the standard fee! Register by Friday, March 5, and the fee for the conference is $1,295.
$1,495 increasing to $1,595 day of conference, space permitting.
$1095 each until Friday, March 5, when you register two or more people to attend from the same company. This rate increases to $1295 each after Friday, March 5.
You can pay by credit card (using the links above or below) or by check. Mail your check and business card to: New York Business Roundtable Inc., 747 Third Avenue, Suite 200, New York, NY 10017.
Can’t attend but want to hear the program? You can buy the audio package along with the handounts.
This event is sponsored by:
4 Front Holdings
ARCO Murray National Construction
Bespoke Capital Partners
Bessemer Trust Co.
Butzel Long PC
Caldwell Partners International
Cannabis Law Digest
Carter Morse & Goodrich
Corbin Capital Partners
Credit Suisse Group
Deloitte Corporate Finance
Flatiron Venture Partners
KCSA Strategic Communications
Kramer Levin Naftalis & Frankel
Leading Edge Expositions
Mana Supply Holdings
Marijuana Policy Project
Millstone Capital Advisors
National Cannabis Bar Association
National Cannabis Industry Association
New Maple Holdings
ONE Cannabis Group
Pernod Ricard USA
Pfizer Consumer Healthcare
PurpleRock Cannabis Partners
Seymour Asset Management
Software Guidance & Assistance
Surterra Holdings Inc.
Townhall Investment Research
TresVista Financial Services
TwinFocus Capital Partners
Universal Brand Ventures
Valuation Research Corporation
Viridian Capital Advisors