It's important for investors in any sector to watch capital raises. The cannabis space is no different. It's important for investors to note how much was raised, why the money was raised, and under what deal terms the money was raised. Some financing structures are more dilutive than others, and missing these signals can come back to bite you.
With few industries growing as quickly as the marijuana space, it's no shock that there were four publicly-listed marijuana stocks raising money last week. Beyond the publicly-listed names, there were also a handful of capital raises for privately held companies as well.
The four publicly-listed cannabis companies that raised money last week are:
- Emerald Health Therapeutics, Inc. (TSXV:EMH) (OTCQX:EMHTF)
- Marapharm Ventures, Inc. (CSE:MDM) (MRPHF)
- Speakeasy Cannabis Club Ltd. (CSE:EASY) (OTCPK:SPBBF)
- Village Farms International, Inc. (TSX:VFF) (OTCQX:VFFIF)
Going in alphabetical order, here's the breakdown of each of the four capital raises.
Emerald Health Therapeutics
Emerald Health Therapeutics is a Licensed Producer under Canada's ACMPR, producing and selling dried cannabis and cannabis oil for medical purposes. It recently acquired Agro-Biotech, a Quebec-based licensed cannabis grower with a 75,000 square foot indoor facility and is adding a 500,000 square foot greenhouse in Metro Vancouver. Emerald also owns 50% of a joint venture with Village Farms International, Inc. that is converting an existing 1.1 million square foot greenhouse in Delta, BC to grow cannabis.
On May 23rd, Emerald announced that it had closed its prospectus sale of 4,000,000 units at a price per unit of $4.20 CAD for gross proceeds of $16,800,000 CAD, equivalent to approximately $13,040,328 USD at current exchange rates. According to the release, Emerald intends to use the net proceeds of the offering to fund the completion of its recently acquired Agro-Biotech facility in Quebec, for working capital, and for general corporate purposes.
Marapharm is a rapidly expanding U.S.-focused cannabis company which has vertically integrated to include cultivation, production and dispensary locations in Washington, Nevada, and California.
On May 21st, Marapharm announced that its non-brokered private placement unit offering closed oversubscribed for total gross proceeds of $4,500,000 CAD, equivalent to roughly $3,493,845 USD at current exchange rates. According to the release, the net proceeds raised from the offering are intended to be used for further development of the company's projects in Las Vegas, Washington State, and California.
Speakeasy Cannabis Club
Speakeasy is a late stage ACMPR applicant with 290 acres of agricultural land in British Columbia's Southern interior region; known as the Napa Valley of weed country. SpeakEasy has already submitted its final "evidence" package to Health Canada for its current 10,000 square feet facility and has commenced construction on its 80,000 square feet expansion facility. This 80,000 square foot facility will include growing, extraction and genetics labs that will be capable of producing more than 10,000 kg annually.
On May 23rd, Speakeasy announced that the company closed the first tranche of its non-brokered private placement of 4,900,000 units at a price of $1.00 CAD per unit for gross proceeds of $4,900,000 CAD, equivalent to roughly $3,804,899 USD at current exchange rates. According to the release, the proceeds of this private placement are for general working capital.
Village Farms International
Village Farms International is one of the largest and longest-operating vertically integrated greenhouse growers in North America. Village Farms not only produces and distributes fresh produce 365-days a year, but applies that experience and knowledge to its Licensed Producer joint venture.
On May 24th, Village Farms announced that it completed its private placement of common shares for gross proceeds of approximately $10,000,000 CAD, equivalent to roughly $ 7,759,000 USD at current exchange rates. According to the release, the net proceeds of the offering will be used, if required, to contribute capital to Pure Sunfarms Corp., the company's 50%-owned joint venture with Emerald Health Therapeutics, as it ramps up commercial production at its 1.1 million square foot greenhouse, as well as for general working capital purposes.
For the most part, these companies' capital raises will all be used for continuing operations. Given the growth stage that the cannabis industry is in right now, many companies are focused on staying ahead of the pack in terms of market share. This tooth-and-nail fight for market share has pushed bottom-line results to the back burner for the time being. With that said, employees still need paychecks, and therefore capital raises are the way to go.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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