New Report Highlights Global Cannabis Industry Investing Trends In 2022
A new data analysis report was recently published involving cannabis industry investing, merger, and acquisition trends from last year. The data analysis study was performed by New Frontier Data and sponsored by Viridian Capital Partners.
Last year was a banner year for the emerging international cannabis industry as a whole, although financial trends varied from market to market. Below are some of the key findings from the recently published data analysis report:
- In 2021 virtually every sector of the industry received blockbuster investments, leading to over $12 billion in capital raises; a combination of economic headwinds and dampened expectations for federal action shrank North American capital raises to $4 billion in 2022.
- The United States continued to attract the majority of investor capital in 2022, growing as a percentage of total capital raised, from 71.7% in 2021 to 80.6% in 2022.
- The United States drove the majority of M&A activity in 2022, growing from 59% of M&A activity in 2021 to 68% in 2022.
- Cultivation and retail remained the leading sectors for M&A activity at 57% in 2022; however, the cultivation/retail sector represented 70% of the activity in 2021.
- The average size of equity raises decreased 44% from $22.17 million in 2021 to $12.40 million in 2022, whereas the average size of debt raises decreased from $45.72 million in 2021 to $21.48 million in 2022.
“Investors are in the process of recalibrating their strategies for the cannabis market. By bringing together two of the most-trusted cannabis industry data companies, we provided an unbiased view of the current opportunities and challenges,” said Gary Allen, New Frontier Data CEO, in a press release. “Simultaneously, the report offers a sobering view of the capital markets for cannabis business owners who must adjust their own expectations for outside investment to construct healthier businesses.”
“Capital investment and M&A activity in the cannabis industry has become more narrowly focused on those states, countries and operators that have proven management teams, business models, and corporate strategy. This report, buoyed by data from the Viridian Cannabis Deal Tracker, provides the insight and actionable data for investors, lenders and acquirers to make smart capital allocation decisions.” added Scott Greiper, President and Founder of Viridian Capital.
The emerging legal cannabis industry will continue to expand across the globe, with new reforms being pursued and/or implemented in 2023, and in some cases, new markets launching.
Additionally, many existing markets will continue to expand in size throughout the year, and it will be interesting to see how statistics from 2023 compare to 2022 once this calendar year is over and the relevant data is compiled and analyzed.