Chart: Which Cannabis Subsectors Are Still Attracting Equity Capital?

  • It is helpful to place the current tight conditions in the markets in a historical context.

  • The graph shows equity capital raises in by quarter and sector from 2019 to the present. The Q2:22 figures represent March 31, 2022 – May 20, 2022. The maroon line represents the price of the YOLO ETF, a good indicator of cannabis equity prices.

          

  • We have commented on the steep decline in equity capital raises YTD compared to 2021. However, the graph clarifies that this comparison is a bit misleading. Equity financing in Q1: 2022 and Q2:2022 to date are not as low as it was in the depths of the  “capital crunch” of 2020, and it is actually the first quarter of 2021 that stands out as an outlier.

  • Cultivation & Retail, historically the most significant sector for equity financing, accounted for only $14M (1.6%) of equity raised YTD in 2022 compared to $1.9B (52%) in 2021. We expect this trend to continue for several reasons: 

    • The MSOs have been able to use equity in acquisitions, one of their primary needs for new capital.

    • The Tier 1 MSOs have strong cash positions and are expected to be free cash …

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