CULTIVATED: How the largest Wall Street banks are cautiously opening their doors to cannabis, food investors make a bet on CBD, and more
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Happy Friday,Never a dull week when it comes to cannabis. Thursday marked year one of Canada's legalization experiment, and while the country (my homeland) is to be lauded for sticking its neck out and becoming the first G7 country to legalize, the results have been mixed at best for consumers, investors, concerned citizens, and anyone else affected by such a monumental shift in social policy. It's worth revisiting this story I published last year on Canada's rocky legalization rollout.
Let's go to the market:
All eyes were on Aphria's earnings this week as the Canadian cannabis company posted its second straight quarter of profitability after facing off with short-sellers in December of last year.
Analysts and industry watchers considered Aphria to be something of a bellwether stock for the Canadian cannabis sector one year into legalization as many companies have seen their share prices crater this year - the Horizons Marijuana Life Sciences Index ETF has fallen 55% - amid lower-than-expected retail sales and other industry headwinds.
My colleagues over at Markets Insider have the scoop on what else went on in the sector this week, including CannTrust destroying $77 million worth of marijuana to get back onside with regulators, Cronos Group being named the new "King in the North" (miss you Kawhi), and some weird moves in the market.
In New York, Gov. Cuomo held a meeting with the leaders of Connecticut, New Jersey, and Pennsylvania - which is also now weighing a legalization bill - to come up with a regional plan to legalize cannabis and set standards around vaping.Cuomo called the issue "one of the most challenging" he's had to address in his time as governor.
Here's what we wrote about this week:
Here's how the largest and most powerful Wall Street banks are cautiously opening their doors to the potentially $80 billion US cannabis industry
As cannabis reform becomes one of the most hotly-debated topics in Congress, some of the largest Wall Street banks are slowly dipping their toes into the industry.
The chief psychoactive component of cannabis, THC, is illegal under US federal law despite being legalized in some form in 33 states. Most federally chartered US investment banks won't raise money or advise on deals for companies that are actively violating federal law, no matter how attractive the growth prospects of the industry are.
Still, the banks are starting to figure out how to serve cannabis companies and develop relationships within the nascent but expanding industry, in a bid for first-mover advantage if or when the market opens up thanks to changes in federal law.
A VC best known for organic-food investments just made its first foray into CBD. A top partner at BIGR Ventures told us why.
BIGR Ventures, a Colorado-based fund that focuses on the food industry, made its first foray into the hemp and CBD space. The firm led a $3 million Series A investment round into RE Botanicals, a CBD tincture, oil, and oral capsule startup.
BIGR partner Carole Buyers explained why the firm decided to invest in an interview on Thursday.We've been researching the CBD industry for over a year," Buyers, one of BIGR's partners, said. "It was the passage of the Farm Bill in 2018 that really gave us the green light to go ahead and invest."
Capital raises, M&A activity, partnerships, and launches
- Washington DC-based cannabis company Holistic Industries closed a $55 million funding round on Thursday.
- California-based Ikanik Farms acquired 100% of Pideka SAS, an indoor medical cannabis cultivator in Colombia.
- Cannabis tech company Flowhub closed a $23 million Series A funding round, led by Evolv Ventures, a venture fund backed by Kraft Heinz, and including Poseidon Asset Management and others.
- Former Seahawks linebacker and three-time Pro Bowler Lofa Tatupu launched ZoneIn CBD, a company that sells CBD oils and capsules. Tatupu joins a list of ex-NFL players who have entered the CBD space, including Patriots tight end Rob Gronkowski.
- TILT Holdings named its COO, Tim Conder, to the company's board. Conder previously founded Blackbird Logistics Corporation, which is now part of TILT.
- Canadian cannabis company Aphria named Jodi Butts, the wife of Prime Minister Justin Trudeau's close confidante Gerald Butts, to its board. Butts is a veteran of other big-ticket boards, including Canada Goose.
Chart of the week
It's worth revisiting this chart, which we published in July, in light of the one year anniversary of cannabis legalization in Canada.
After a number of scandals involving publicly traded Canadian cannabis companies, Canadians have a dim view of operators in the industry:
Stories from around the web
Investors hope psychedelics are the new cannabis. Are they high? (The Economist)
CBD or THC? Common drug test can't tell the difference (The New York Times)
The Ebbu files (WeedWeek)
Nevada cracking down on marijuana businesses (Las Vegas Review-Journal)Frustration and pride in Canada after a year of legal pot (The Associated Press)
Aphria profit didn't come from selling marijuana (MarketWatch)
Did I miss anything? Have a tip? Just want to chat? Send me a note at firstname.lastname@example.org or find me on twitter @jfberke.