Cannabis Debt Looms For These Weed Giants: Here’s How Some Tackled Their Financial Challenges
It’s no secret that cannabis companies are facing some formidable challenges when it comes to raising capital, thanks to marijuana’s onerous classification as a Schedule I controlled substance under federal law. But now with potential changes on the horizon, such as cannabis rescheduling and banking reform, more companies just might improve their financial positions and attract new investments.
Even now, in anticipation of potential regulatory changes, there’s been an increase in capital raises. Frank Colombo, managing director of data analytics and investment banking at Viridian Capital Advisors, provided an overview of capital raising trends the Benzinga Cannabis Capital Conference. He told the crowd gathered in Chicago there’s been an increase of 14.8% in capital raises in 2024, driven mostly by Canadian equities and U.S. debt.
Colombo said U.S. debt accounts for over 50% of capital raises, indicating a reliance on debt financing rather than equity in the market. Retail and cultivation sectors are responsible for half of all capital raises. However, out of 12 different sectors, “investments in M&A” were “really up,” he explained.
But Still…Cannabis Debt Looms
Green Market Report’s Debra Borchardt took a closer look at what she called it “a tsunami of debt headed …