June 16, 2017

Full-service, North American legal cannabis management company MedMen has closed on $60 million for its $100 million MedMen Opportunity Fund launched last summer.

The firm states that its fund is a first-of-its-kind. A comprehensive knowledge of the fragmented regulatory nature of the space and a team with a deep reservoir of experience in the licensed cultivation, extraction, production, and retail sale of legal marijuana, gives MedMen the ability to offer the only turnkey services to the legal marijuana industry.

“The cannabis business is very operationally intensive,” said MedMen chief strategy officer Chris Ganan in a company statement. “There has yet to be a Fund platform that combines proprietary access to diversified investment opportunities coupled with execution capabilities in the same vehicle, until now.”

The fund has partnered with private investment company, Wicklow Capital, in pursuit of diversified investments in supply-constrained, high entry barrier markets. The fund also will own a stake in MedMen’s management company, which will provide resources and oversight of assets as the fund’s captive operating partner.

Alongside raising $60 million toward its total targeted corpus of $100 million, the fund has seen $92 million in transactions. Investments include seven deals in highly strategic marijuana markets across three states, according to HortiDaily.

Key investments include:

The acquisition of Bloomfield Industries – one of the five licensed medical marijuana producers and distributors in the state of New York, and owners of one of the two dispensaries located in Manhattan.

The acquisition of a stake in a 45,000 square-foot cultivation and production facility in Nevada.

The acquisition of a stake in MedReleaf – one of the largest licensed producers and distributors of medical marijuana in Canada. With this deal, MedMen came to control a 19 percent share of the Canadian medical marijuana market, which saw revenue jump by 141 percent last year.

An Industry Coming into its Own

As the legal, medical, and recreational marijuana industry matures, we see both revenue and investment numbers in the sector climb.

As North American consumers spent $6.9 billion on legal cannabis products in 2016, according to market analyst firm AMR, U.S.-based investment firm StarGreen Capital announced this May that it plans to invest $100 million within the next year in California’s legal medical and recreational cannabis supply chain.

“The industry is losing its taint as a drug industry and is becoming a much more sophisticated market,” Scott Greiper, president of Viridian Captal Advisors, a firm that tracks the industry, told Fortune last July.

Nationwide, New Frontier Data, a cannabis market research and analytics firm, predicted that two dozen states will have fully operational medical marijuana or recreational marijuana markets by 2025, with California accounting for more than a quarter of the country’s total sales, reported The Cannabist.

However, despite this significant market potential, the industry faces heady challenges on multiple fronts, including U.S. tax code regulations, a ban on inter-state commerce, a lack of financing from banks, and a need for high security. Signs are pointing, however, toward expanding legalization and liberalization of sentiment toward the business – a shift reflected in the increased investment activity by a variety of market players.

In November 2015 the Canna Group announced the launch of Sugar Leaf Capital Fund I, which like Salveo, will invest in early-stage, cannabis-related businesses that are generally ancillary to the production or processing of the cannabis plant, including businesses active in chemistry, science and genetics, business services, software, grow systems, payments and banking, and agriculture and operations.

Last July, Seventh Point announced that its friends and family round of fundraising closed oversubscribed, and Florida-based Phyto Partners is in the process of building a $10 million cannabis-focused private equity fund. Meanwhile, Miracle-Gro and Microsoft stepped out of the mainstream and surprised investors and rivals alike by becoming outspoken investors in the space.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.