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Canadian licensed medical marijuana producers recorded mixed movements yesterday and the sector came well off its highs in the morning.
We are monitoring this volatility as it comes while several firms have announced or completed significant financing agreements. Capital continues to enter the Canadian cannabis industry and we do not expect this trend to end anytime soon.
The companies raising capital are doing so to expand production capacity, make acquisitions, and enter new international markets. We are favorable on these growth initiatives and expect to see an increased focused on these types of initiatives. Today, we have highlighted three recently announced financing deals that investors should be aware of.
MedReleaf Announces $132.5 Million Financing
Yesterday, MedReleaf (LEAF.TO) fell 10% after announcing a $132.5 million bought deal at $26.50 a share. LEAF.TO is trading below this level after the pullback and we remain bullish on the company’s long-term outlook.
Earlier this week, Cowen and Company raised its price target on MedReleaf to $36 from $20 and the market to respond favorably to this upgrade. We are favorable on the capital raise as MedReleaf plans to use the capital to finance the acquisition and/or construction of additional cannabis production and manufacturing facilities in Canada and abroad.
Maricann Raises $40 Million in an Oversubscribed Offering
After the market closed, Maricann Group Inc. (MARI.CN) (MRRCF) closed the previously announced private placement of special warrants for aggregate gross proceeds of $40,250,000. We will monitor how the market responds to the closing of this offering as the shares trade at $3.45.
The licensed medical marijuana producer offered special warrants at $2.00 each, a significant discount to the current price. Maricann intends to continue to expand operations by adding 630,000 sq. ft. of greenhouse space. Upon completion of the expansion, the company expects to be able to producer more than 95,000 kilograms per year.
We remain bullish on Maricann due to the company’s potential to capitalize on the German medical marijuana market as well as its existing operations in Canada. We consider Maricann to be a long-term opportunity and one that investors need to watch.
DOJA Closes Financing Ahead of Tokyo Smoke Merger
DOJA Cannabis Company Limited (DOJA.CN) (DJACF) surged higher after announcing the closing closed of a non-brokered private placement of subscription receipts, whereby Aphria (APH.TO) (APHQF) and Koicha Partners LP acquired an aggregate of 8,992,807 subscription receipts at $1.39 for gross proceeds of $12,500,001.
The financing supports the strategic positioning of Hiku Brands Company, the anticipated combined company resulting from the merger of DOJA and Tokyo Smoke. DOJA intends to use the net proceeds to expand its cannabis production capacity, grow its retail footprint, and add select brands to its portfolio through highly strategic and complementary acquisitions.
Aphria's strategic investment marks the marijuana producer’s first venture into British Columbia's premium cannabis market. DOJA and Aphria have agreed on the terms of a supply agreement, to secure cannabis concentrate supply for Hiku's premium brand portfolio. We are bullish on this strategic partnership and investment and continue to remain favorable on the combined company.