Welcome back to Cultivated, our weekly newsletter where we’re bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.
Welcome back to Cultivated, everyone! I’m really excited to be back in your inboxes and I hope you’re all excited for your weekly rundown of the never boring, always entertaining, and sometimes fascinating cannabis industry.
For those of you who aren’t as online as me and probably missed all of my social media posts, I spent the last two months covering New York state’s response to the coronavirus pandemic as it quickly sucked up all the oxygen in the media — and our daily lives.
Thankfully, things are slowly stabilizing in New York City. Though we’re not out of the woods yet, cases are down, hospitals are getting back to normal, and the daily death counts are dropping. Let’s hope policymakers and healthcare workers do what they can to ensure those trends continue.
I’ve been playing lots of catch up with many of my sources this week and I’m sure there are lots of stories I’ve missed over the past two months.
Cannabis earnings — highlighted by Curaleaf and Trulieve — seem to have been a bright spot in the wider recession-tinged market. With more people stuck at home, (legal) cannabis seems like a good way to spice up your bread-baking sessions and The Office marathons.
I also participated in a Zoom panel with some top-tier cannabis reporters and PRs about opening up a better line of communication between publicists and the media. I think it was a constructive discussion and I hope you were able to watch.
Drop me a line if you have an idea of what I should be covering or who I should be speaking with. You can find my contact info below. We have lots of great stories coming next week.
Here’s what we wrote about:
The vehicle DraftKings used to go public has caught the eye of cannabis investors, who have poured nearly $3 billion into ‘blank check’ money
Investors targeting the cannabis industry are turning to special purpose acquisition companies, or SPACs, to chase down cannabis deals.
Most traditional investors, like pension-backed venture capital or private-equity firms, are reticent to invest the industry since cannabis is federally illegal in the US.
Investors have poured $2.8 billion into cannabis-focused SPACs since the start of 2019. The entire SPAC market over that time raised roughly $17.5 billion.
Investment in psychedelics has ramped up in recent years and companies say that interest from traditional biotech and pharma investors has picked up as well.
We identified the top nine companies that are working to turn psychedelics into approved medicines, for conditions like depression and anxiety.
- California cannabis manufacturer CannaCraft has added three new board members: Leon Sharyon, Mason Garrity, and Gareth Clark. Sharyon, notably, was the longtime CFO of Lagunitas Brewing.
Deals, deals, deals
- Champignon Brands, a startup developing ketamine and psychedelic therapies, announced a $10 million private placement with Canaccord Genuity and Eight Capital, two of the Canadian midsize investment banks that led cannabis capital markets from the beginning. Watch this space.
- 4Front Ventures, a cannabis company that has recently contended with executive churn and layoffs, found a lifeline: a $5.8 million private placement from cannabis investment fund Navy Capital, and an asset sale to Ethos Capital. Earlier in May, 4Front sold off $18 million in assets.
- Aurora Cannabis finally made its entrance into the US CBD market with the $40 million, all-stock purchase of Reliva LLC announced on Wednesday.
- Materia Ventures acquired 100% of German medical cannabis company Cannaktiv GmbH.
Chart of the week
This one comes from Cowen’s cannabis analyst, Vivien Azer, in her US cannabis deep dive, citing data from the Center for Responsive Politics.
As you can see, cannabis companies spend slightly more proportionally than their “vice industry” peers on lobbying state and federal governments. In total, however, cannabis lobbying pales in comparison to alcohol and tobacco lobbying.
Cannabis companies spent $5.3 million on lobbying in 2019, compared to close to $30 million for tobacco and alcohol in 2019.
What we’re reading
Cannabis short sellers down $641M in May (Benzinga)