OUR 8TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / CBD / PSYCHEDELIC SECTORS

Capital Raises

Past Charts

Capital Raises

Capital Raises Summary

Each week, Viridian publishes insights and analysis on completed capital raise transactions in the prior week, focusing on all equity and debt deals. Our analysis includes:

  • YTD Analysis
  • Sector Focus
  • Capital Raises vs Equity Prices
  • Outlook
  • Sector and Company Performance
  • Capital Raises by Sector

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YTD Analysis

Week ended 03/18/2022

  • Transactional ActivityThere were two more transactions and an $85.9 million higher volume this week than the prior week. Compared to last year’s same week, seventeen fewer transactions closed with a $1.03 billion lower volume. The average deal size was $22.8 million this week vs. $52.1 million in the same week last year.
  • Cannabis stocks had their best week of the year, and total capital raises of $114.2  were closer to the LTM average of $177M. Still,  the $823.5M capital raised YTD was down approximately 82% from last year’s figure of $3.7B. Reduced equity issuance (down 88% y/o/y in the U.S. and 97% in Canada) was partially compensated for by solid debt issuance (up 382% y/o/y in the U.S. but down 98% in Canada.  As the graph below shows, capital raises for the first eleven weeks of 2022 were dominated by U.S. activity. The $54M raised by European companies YTD is the highest international raise since 2019 and the most significant percentage of total capital raised in history
  • We began to track the psychedelics sector this week with our Viridian Chart of the Week titled “High, Dry, or Tripping,” showing the market caps of ten of the most frequently covered companies in the sector and how they have performed YTD. Future editions of the tracker will drill into capital markets activity in the sector,


                                                                                         

  • The markets in general and cannabis, in particular, shrugged off the war, inflation, COVID, and increased threats of future recession to score a tremendously up week. The market seemed to take comfort in Jay Powell’s aggressive rhetoric signaling the Fed will likely resort to at least one greater than 50bp move during the following year.
    • The FED is attempting to quell inflation and engineer a soft landing in the face of increasingly entrenched inflationary expectations, multiple asset bubbles, and challenging macro/political circumstances. We remain convinced that the FED will eventually have to bite the bullet and slam harder on the breaks lest it allows accelerating inflation. And history is pretty clear that the recession risks go up markedly when that happens.
    • The graph below shows the two-year vs. ten-year treasury yield spread, the most commonly watched indicator of an upcoming recession. The curve has not yet become inverted, but it is the closest we have seen since early 2020. This indicator is pretty good, and we will be keeping our eye on it.

  • We still see long odds of Washington pulling off the Safe Act or any other substantive cannabis legislation before the midterms, so we focus on non-legislative catalysts like the New Jersey rollout.
  • Cap Raises by Sector:
          

Market Commentary and Outlook

This Week Sector Focus

Capital Raises vs Stock Prices

Best and Worst Stock Performers