On Sept. 10, Viridian Capital Advisors LLC, in collaboration with CannabisFN, rolled out the first of its free monthly online events designed to give investors the opportunity to interact with leading analysts and investment bankers in the cannabis industry. As it continues, the series will analyze the risks and opportunities of the legal marijuana industry and the public companies operating within it. The goal of the collaborative venture is to help investors to identify cannabis companies that are attracting capital, executing on business plans and poised to succeed.
The Viridian Cannabis Stock Index covers 80 of the more than 350 publicly traded companies in the cannabis industry that Viridian believes are best positioned for growth. It was recently ranked by Barron’s as the benchmark index for the cannabis industry. Viridian’s vision of the emerging industry is unique in two major ways.
First, its approach divides the legal industry into 11 major sectors, among them biotechnology, consulting services, retail and ancillary cultivation, infused products, security and software. Viridian’s analysis is premised on the realization that each of these has its own risks and characteristics.
Second, Viridian’s view moves beyond the theme of marijuana and legalization, where much early investment was focused. A seasoned team of bankers, analysts and brokers focuses instead on identifying strong management teams and products. That, according to Scott Greiper, President and Founder of Viridian, is the way the industry can attract better and more capital.
The drivers of growth for the cannabis industry in the near future may include:
- The increasing legalization of recreational use. In the remaining months of 2015, the only major state ballot initiative is in Ohio. In 2016, however, 7 to13 states—most notably California—may move toward legalization.
- Emergence as a 2016 presidential election issue. Republican and Democratic candidates are increasingly adopting clear positions in support or opposition to legal cannabis.
- Increasing exposure of institutional investors. As institutional investors are more exposed to investment in the legal marijuana market, they may be attracted by strong industry growth rates, rationalized business models and reduced valuations. As valuations in the public cannabis companies continue to reflect experience, Viridian analysts expect increasing openness on the part of institutional investors to equity investment, as opposed to the straight debt and convertible debt financing that has made up the bulk of financing in public cannabis companies previously.
- Increased merger and acquisition activity. This could be prompted by a number of factors, including mergers among public companies seeking to build their revenue and asset base; acquisitions among providers of like products and services in order to build market share; and acquisitions among providers in different product or technology sectors in order to enhance product diversity and reduce concentration risk.
Companies that will be discussed during the series include technology firms like MassRoots Inc. (OTCMKTS: MSRT) and Heliospectra AB (OTCMKTS: HLSPY) and growers including Tweed Marijuana Inc. (OTCMKTS: TWMJF) among others.
Greiper will host educational seminars on “Finding and Attracting Capital” and “Public Capital Market Performance” at the Marijuana Investor Summit in Los Angeles on Sept. 16.