Last week, CanopyBoulder Managing Director, Patrick Rea attended IMN’s Institutional Capital & Cannabis Conference in New York and Kahner Global conference in Toronto, the financial capitals of the US and Canada. It was an interesting trip as both conferences were centered around cannabis investment, but they highlighted the stark differences between the US and Canada. Check out our recap of the events and takeaways:
IMN’s Institutional Capital & Cannabis Conference
This investor forum was co-founded by IMN and MedMen to drive institutional investor interest in the cannabis industry. But before, we get too far down that path, lets clarify what we mean by institutional capital. This type of funding includes banks, insurance companies, pensions, hedge funds, REITs, investment advisors, endowments, and mutual fund and acts as an intermediary between individual investors and companies. Often they have significant investment scale, pooling large sums of capital, and charging investors a fee to source, negotiate, place, and manage investments.
Institutions are the opposite of retail investors - those individuals buying and selling stocks through their brokers or online trading platforms. Often they can invest on a longer time horizon because they are institutions, and not individuals who both accumulate and consume their wealth - generally on a life-cycle of just that - their lives.
The event focused on really high level financial content, on par with what you’d expect from an institutional capital investor conference. But, beyond content, a lot of the value from the event was in the networking. The attendees of the event reflected this institutional component and really highlighted where US capital for cannabis stands. There were many hedge funds, some representatives from big names like JP Morgan, many of the publicly traded Canadian licensed producers (LPs), and more than a fair number of financial consultants, high finance job seekers and investment bankers who are open to taking 6-8% and options or warrants to raise money for you. But, hey, it is New York and the industry is gaining traction.
Overall, the event was a great one, with an excellent turnout, interesting content, valuable networking -- all in the perfect location. In our opinion, this event would benefit later stage companies raising $10M+ and public companies. However, based on the interest and attendees, we don’t think its a great fit for startups.
Make sure to catch the next event May 9-10 in Los Angeles. Hopefully by then, the California cannabis industry will have settled a bit, creating a great opportunity for institutional investors and the companies looking for them.
Kahner Global Cannabis Private Investment Summit
From New York, we headed to Toronto for the Kahner Global Cannabis Private Investment Summit. The event was founded by Noa Kahner, and, like everything Noa does, the event was excellent. We’ve previously attended past CannaBrunch events organized by Noa which are always valuable and will continue to do so in the future.
This event is designed as an investor summit for family offices, which are private wealth management firms that manage investments for high-net-worth individuals and families, and focused heavily on the Canadian market, as expected.
Compared to some of the other events we’ve attended, Kahner Global offered more granular and specific content, including some discussion as to when and how Toronto authorities would crack down on illegal dispensaries. There was also content for investors around ancillary vs plant touching businesses (something we talk about a good bit) and potential returns from real estate investments in the space.
Perhaps one of the more interesting discussions was around Canadian LP investments. Last week, we saw share prices fall but there was talk about a correction. This was relevant as the topic quickly turned to investment strategies that got us here in the first place and how those need to change to get you where you need to go tomorrow. To date, these big investments have been made primarily by retail investors who are flooding into the IPOs in Canada and not by the more sophisticated institutional investors.
Also included in the discussion was talk about the next wave of cannabis investments which many expect to be in the US. Though good opportunities still exist in Canada, they are much harder to find than before - you can’t just buy every public LP in Canada anymore. Overall, Canadians have done well in this boom but are now looking for new opportunities
The next Kahner event will be February 26th in Fort Lauderdale, FL - an excellent time of year to head to the beach. And, depending on how Florida legalization develops, it could be an even more valuable event than usual.
Our trip to cannabis investment conferences in the financial capitals of both the US and Toronto yielded very different experiences. Overall, what we’re seeing is that Canadian investors have experienced their investment arc, and are looking for the next arc. Meanwhile, US investors are waiting for theirs. This hasn’t been lost on folks - as the sharks are circling the opportunity to provide services to bridge the gap between companies and capital. Where we used to have a just a few bankers - Viridian, Mazakali, Golden Eagle Partners - we now have a multitude of new entities joining the fold, just in the last six months. Much of this is likely driven by the Canadian LP raises.
Some topics we expected to hear more about but weren’t discussed as much were the profitability of the existing businesses in the US that touch the plant, the Farm Bill and hemp/CBD legalization and public market fatigue for deals. Perhaps these topics just aren’t on everyone’s minds yet, though we suspect they will be.