Raising capital for cannabis stocks hits highs

Capital raising for cannabis is rapidly reaching new highs. Analysis of Crunchbase's data shows cannabis companies are getting bigger and bigger checks from equity funding, and the number of funding rounds appears to be shifting from seed to later-stage rounds.

It was announced today that leading cannabis tech company Dutchie has closed another major funding round. This $ 350 million Series D valued the company at $ 3.75 billion and follows the company's $ 200 million round in March 2021. Dutchie has raised $ 603 million to date.

Dutchie is among a growing list of cannabis companies running large rounds of funding in 2021. Jane Technologies picked up a Series C for $ 100 million in August and Kadenwood made a Series B for $ 50 million. Other companies are turning to post-IPO equity, such as B. MedMen, which raised $ 100 million through a private placement. Weedmap's parent company received a $ 325 million investment in addition to its SPAC.

In the first five months of 2021, 132 cannabis company funding events were held, each raising an average of $ 15 million. However, the intensity of funding has accelerated this year. Over the past five months, cannabis companies have raised an average of $ 28 million at 73 funding events, an increase of 86%. This includes pre-seed investments up to Series D as well as post-IPO fundraising and equity crowdfunding.

Compared to 2020, the average investment size has increased by 165%, from an average of USD 7.5 million in 2020 to USD 19.9 million in 2021. The number of funding events also increased dramatically: in the first ten months of the In 2021, 205 financing rounds have been reported so far. In all of 2020 there were only 176.

Investments increase in almost all investment phases. According to data from Crunchbase, the average seed phase investment in 2021 is $ 1.86 million, an 85% increase from the 2020 average size of about $ 1 million. Series B and Series C checks are up 128% and 154%, respectively, with average sizes of $ 18.96 million and $ 101.67 million, respectively. One exception to this trend: the reported size of Series A investments has decreased by 25% year over year. Even if the general trend continues, there is no clear reason why this particular phase has lagged behind.

Cannabis remains an illegal substance nationwide, but companies are finding new ways to grow in the face of increasingly stringent regulations. COVID helped with this. In the early days of the pandemic, dispensaries across the country were rated as essential businesses and consumer adoption skyrocketed. In the second half of 2021, more Americans are comfortable with cannabis than ever, and so are investors.