Retail and cultivation remains the most active segment for capital raises, even though the volume was cut nearly in half.
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In recent years, many investors fled the marijuana trade, after lackluster earnings and stalled legalization. They also don’t appear to be rushing back in just yet.
Simply put, the sector remains volatile – and with federal cannabis rescheduling still up in the air, it’s not clear when or how they may be drawn back.
Capital fundraising activity in the marijuana and psychedelics industries has dropped by almost 40% in the last year, according to analysis from Viridian Capital Advisors. It’s not just the number of raises either. By sheer dollar amount, fundraising is down nearly 50%.
The number of capital raises in the sectors plummeted to 127 in the last 12 months, compared to 204 raises between July 2022 and July 2023, Viridian reported. That’s a decrease of 37.7%. The value of those raises plummeted 48.8%, Viridian found, to a combined dollar value of just $1.4 billion; for the same period a year ago, it was $2.9 billion.
The retail and cultivation subsector within the marijuana trade led the fundraising for the past year, representing 44 of the 127 deals inked, but that’s still down from 80 deals in the 12 months prior, Viridian reported. The latest 12-month period tallied a value of $650 million for the segment.
The psychedelics arena was next in line, with 16 capital raises, down from 24 the year prior, for a value of $475 million.
After that came the biotech/pharma subsector, which completed 31 raises in the past year, but for a value of just $184 million, Viridian reported.
In fourth place was the software/media cannabis sector, which was the last category to put together a double-digit number of raises with 16, down from 26 the year prior, for a value of just $60 million.
All the remaining subsectors in the cannabis trade tracked by Viridian – which includes real estate, mergers and acquisitions, investments, consumption devices, infused products, agriculture technology, hemp, miscellaneous ancillary, consulting services, and physical security – pulled in a total of 20 raises combined, for a value of $124.5 million.
The biggest decline in capital raises was in the hemp subsector, where only three raises were completed in the past year, down 73% from the year prior, with a 97% decrease in the value of raises to $4.4 million from $142 million.
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