Cannabis Investment and M&A Continues to Boom — 15 investment firms offering businesses an opportunity to grow
There’s no question: 2021 was a historic financial year for the cannabis industry. After 2020, which was characterized by plummeting investment and struggling businesses, 2021 generated 165% year-over-year growth in capital that revived the industry and gave many professionals an optimistic outlook toward the future. Marked by impressive acquisitions and billions of dollars in investments, the current cannabis financial landscape is flush with capital. So, how can hopeful entrepreneurs and established businesses follow the money? With mergers and acquisitions on the rise, top venture capital and private equity firms have advice about tapping into this promising market.
Rapid industry growth has catalyzed not only investment but also significant mergers and acquisitions that are driving recent industry consolidation. Cresco Labs made headlines in March after announcing its $2 billion acquisition of Columbia Care—a deal that will position them as the largest multi-state operator in market value. Last October, Trulieve completed its acquisition of Harvest Health & Recreation for $2.1 billion. Deals in 2021 eclipsed those of 2020, and more consequential transactions are on the horizon as the U.S. pushes toward federal legalization. Experienced investors remain confident despite regulatory headwinds.
As founders of Poseidon Asset Management, a leading investor in the legal cannabis and hemp space, Emily and Morgan Paxhia are well-versed in the nuances of cannabis financing. Both public and private companies have the potential to attract investors, whether they be institutional or high-net-worth individuals. Top firms like Poseidon view a brand’s revenue as the leading indicator of consumer product adoption, thus reflecting the potential long-term value of an investment. Companies actively fundraising should evaluate a firm’s reputation, objectives and experience before accepting any capital. Companies aiming to attract investors can take several preemptive steps, including engaging investor-approved legal firms, tracking key performance indicators and keeping interested investors informed of progress and networking.
Poseidon is not the only firm on the scene: More than fifty private equity, angel and venture capital firms are active members of the cannabis investment ecosystem. Entourage Effect Capital, for example, has invested in more than 65 companies, including Phylos Bioscience and TerrAscend. Pelorus Equity Group utilizes asset-backed lending, funding 10% of the total commercial real estate for cannabis use. Venture capital firms like Casa Verde Capital have their eyes on European legislation that could inform the U.S.’s regulatory future, while Tuatara Capital provides a hands-on approach to best position their investors. No matter their approach or focus, these firms are bolstering established operators and setting future cannabis giants up for success.
“After a year of record growth in 2021, cannabis operators in 2022 have high expectations for what is predicted to be the industry’s biggest year to date,” said Kathee Brewer, editorial director at Inc Media, publisher of mg Magazine. “Considering the astonishing amount of capital circulating within the industry, operators and investors alike have every reason to be optimistic about the coming months. If the industry plays its cards right and leans into this momentum, cannabis could witness exponential growth this year.”
About mg Magazine:
Founded in 2015, mg Magazine is the multi-platform media resource retail executives, buyers, investors, manufacturers, and marketers in the U.S. cannabis industry turn to for the expert insight and analysis they need to drive revenue and growth. By providing actionable intelligence about emerging trends, best practices, and innovation, mg‘s principled, unbiased, factual journalism helps the industry navigate the present while preparing for the future.
Cannabis Investment and M&A Continues to Boom
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