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Canadian cannabis companies on $2-billion fundraising spree as legalization looms

"The money taken in and the deals being done this year by Canada’s marijuana industry dwarf those of last year.

An employee inspects marijuana plants inside the flowering room at Tweed Inc., in Smith Falls, Ont.

Cannabis-related companies in Canada have raised more than $2 billion so far this year as they lock down financing needed to serve the country’s coming recreational pot market, according to New York-based Viridian Capital Advisors.

The funds have been earmarked for cultivation, retail and deal-making, among other uses, Viridian said.

“While the medical market is expected to continue to grow over the next several years, the size of the coming adult-use market is expected to far exceed that of the medical side,” said Harrison Phillips, vice-president at Viridian. “Companies have been raising significant amounts of capital, primarily to increase capacity to satisfy the coming surge in expected demand.”

The Viridian Cannabis Deal Tracker’s tally covered deals completed as of the beginning of this month.

The capital was raised via 189 transactions, and exceeds by a significant margin the US$937.4 million that had been raised by the entire global legalized cannabis industry at this point of 2016.

The US$1.5775 billion raised in Canada also makes up more than half of the raised money tracked by Viridian this year in the legalized industry, which was a total of US$2.696 billion via 366 transactions.

Meanwhile, Viridian says there have been 78 mergers and acquisitions of associated companies in Canada this year to date. There had been 85 deals both inside and outside Canada at this point last year, according to the tracker.

“Additionally, companies have continued to invest in larger facilities with more advanced technologies (LED lighting and automation for cultivation, more scientific and precise equipment for extraction, etc.), leading to increases in the average raise sizes,” Phillips said."...

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