MJBizMag January 2021 - 44

New Year, New Opportunities
Factors That Signal a More Bullish
Cannabis Investment Climate
Declining cost of capital and renewed interest
by investors offers hope to industry executives
By Omar Sacirbey
A
fter a turbulent two years that
culled weaker businesses from
the cannabis industry, investors
now have a stronger field of companies
from which to choose. At the same time,
marijuana businesses seeking capital will
find it more available than it has been of
late, though investors will likely be pickier
about where to wager their money.
The cannabis industry " is at the tail
end of a nearly two-year bear market, "
said Al Foreman, managing partner
at Tuatara Capital, a cannabis-focused
private equity firm in New York City.
That bear market, Foreman explained,
followed a period of irrational exuberance
when investors-including retail players
and family offices, plus a much smaller
number of established angel investors and
private equity firms-pumped money
into unproven cannabis companies and
often got burned. That period helped
usher in the bear market that Foreman
said started with a downturn in Canadian
public exchanges in the first quarter
of 2019 and continued through the
vape crisis as well as the coronavirus
pandemic-triggered recession in 2020.
Only in the second half of the year
did a trickle of investments herald a
thaw. That thaw continues, thanks to
reasons ranging from the November
election-in which five states legalized
new marijuana programs-to dozens of
states designating cannabis businesses
as " essential " and allowing them to stay
open during the pandemic.
" There are multiple tailwinds really
Investors say a bull market might return for publicly traded cannabis companies in 2021.
Photo above and below right by Porter Binks
Al Foreman
Jacqueline
Bennett
benefiting the industry now, " said
Jacqueline Bennett, a partner with
investment firm Highlands Venture
Partners in New York City.
Foreman agreed that several variables
are reviving confidence in the cannabis
space. " Operators and companies
attempting to raise capital should see a
44 Marijuana Business Magazine | January 2021
positive shift in the supply-side dynamic
sometime in the first half of 2021, " he said.
While companies seeking to raise
capital will find investors more willing
to provide it, that doesn't mean the
irrational exuberance of 2018 will return,
insiders cautioned. Rather, investors will
be much more selective.

MJBizMag January 2021

Table of Contents for the Digital Edition of MJBizMag January 2021

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