BIV MAGAZINE
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BIV MAGAZINE: THE BC INVESTING ISSUE 2020 PUBLISHED BY BUSINESS IN VANCOUVER
CANNABIS COMPANIES FACE CAPITAL CRUNCH Detailed corporate books and negotiating strategies key to snagging investment and financing
Investor appetite for cannabis-related investments has shifted. Business basics are critical as hype around the industry has given way to hesitation • CASCADE CREATIVES/SHUTTERSTOCK
GLEN KORSTROM
T
he slight bump in share prices for Canadian cannabis companies in early 2020 was a welcome respite from the plunge in corporate valuations that happened throughout 2019.
While few believe that the sector is out of the woods, entrepreneurs who structure their companies in ways demanded by investors can still secure venture capital. Gone are the giddy days of 2018, when investors were infected with a cannabis fever that drove up share prices ahead of legalized recreational marijuana sales in Canada. Instead of securing loans, getting equity financing and navigating initial public offerings, corporate CEOs today tend to be facing more dismal prospects, which have forced layoffs at a number of cannabis companies, including B.C.’s Emerald Health Therapeutics, which announced last October
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that it had laid off 65 employees, or about one-third of its workforce, since August 1, 2019. Personnel changes have also included the exits of key executives who were once the public faces of large cannabis companies, including former Aurora Cannabis Inc. chief corporate officer Cam Battley and former Canopy Growth Corp. CEO Bruce Linton. For every Hexo Corp., which recently closed a production facility, there is an Aurora Cannabis, which postponed construction on two production facilities. Some companies are merging with others to stay afloat, or, in a worst-case
2020-02-26 3:07 PM
