Twenty-three states plus the District of Columbia have legalized the use of medical marijuana across the U.S. In addition, it is likely that several states will join the existing four states (Colorado, Washington, Oregon and Alaska) that have legalized marijuana for recreational use by adults over the age of 21. Direct legal cannabis sales totaled approximately $5.4 billion in the U.S. in 2015 and are expected to grow into an approximately $21.8 billion market by 2020.
Despite the rapidly expanding legal cannabis market, there remains a significant lack of traditional sources of capital via commercial lending, venture capital, and private equity investment in the U.S., as well as a lack of traditional management expertise and advisory services that usually accompany professional capital.
The industry is still in its early stages but is slowly showing signs of maturity. In 2014, many small cannabis companies entered the public markets without much substance behind their ticker symbols. Early excitement and press coverage encouraged a deluge of inexperienced, untested entrepreneurs into the public markets even as smart money refused to play. However, in two short years, the market has corrected most of those high-profile early cannabis stocks.
Still, optimism and continuing growth dominate the industry. In 2013, the US Department of Justice announced that it would no longer prioritize the prosecution of individuals and businesses that are in compliance with state laws that have legalized marijuana use, either for medical use or recreational use. This policy was reinforced by passage of the 2015 federal budget bill that prohibits federal monies from being used to prevent implementation of state laws legalizing marijuana. The bill evidenced growing bi-partisan support in the US Congress for repealing the federal prohibition on marijuana and allowing the states to decide the issue for themselves.
In order to have a sustainable, compliant, and robust cannabis industry alive and well in the public markets, the vanguard must be lead by smart and strategic companies, willing to identify niche opportunities and commit to due diligence at every turn.
One such company is New York-based iAnthus Capital Management, led by founders Hadley Ford and Randy Maslow. iAnthus Capital Management provides licensed cannabis operators in the United States a unique combination of access to value-added capital investment together with expert management advice and advisory services. The legal marijuana industry is carefully regulated through state-granted licenses to cultivate, produce, and dispense cannabis. These licensees are essentially winners of “golden tickets” in the nascent industry. Providing these license-holders with much needed capital as they establish and expand operations across the various states is a forward thinking strategy for generating earnings with high margins and first-mover advantage. To further support its licensed partners, iAnthus has assembled an exceptional management team that combines deep experience in investment banking, corporate finance and traditional health care services with cannabis cultivation, derivative product manufacturing, dispensary operations and regulatory expertise.
The leadership at iAnthus Capital Management stands out in this young but rapidly-growing industry. iAnthus co-founder and Managing Director Hadley Ford was previously the co-founder and CEO of ProCure Treatment Centers, Inc. (“ProCure”), the world’s leading developer and operator of full-service proton therapy centers for the treatment of cancer. From ProCure’s inception, Mr. Ford grew the company to over 300 employees and $100 million of annual revenue. Prior to ProCure, Mr. Ford spent fourteen years on Wall Street with First Boston, Bank of America and Goldman Sachs where he completed over 150 transactions worth billions of dollars covering multiple industries. Mr. Ford received his M.B.A. from the Graduate School of Business at Stanford University and a B.S. in Business Administration from Boston University.
In a recent call, Mr. Ford stated, “Through our carefully researched approach with our investments and our ability to add real-world experience and value to our licensed partners, iAnthus is helping to legitimize the space. We bring structure and experienced business and management expertise to the cannabis industry investments that we make.”
iAnthus co-founder and Managing Director Randy Maslow is a veteran technology industry attorney with more than 25 years’ experience as General Counsel to rapidly growing companies in emerging industries. Mr. Maslow served as a senior executive and General Counsel to several successful internet companies before co-founding Internet Gaming Entertainment U.S., which pioneered the virtual currency exchange industry for online computer games and grew from a startup to over 400 employees in the U.S. and Asia with over $100 million of annual revenue. Mr. Maslow is a graduate of Cornell University and the Rutgers University School of Law, and was previously an attorney with the international law firm Greenberg Traurig LLP.
The pedigree of iAnthus’ management team may be a rarity in the industry as it currently stands, but with an overall potential market of $50B or more for direct cannabis sales in the U.S., investors are likely going to require it.
iAnthus has listed six states as high priority targets for investment, and has four more on its watch list. iAnthus has developed a diversified pipeline of high-quality investments in licensed cannabis operations across legal state markets, including both participating preferred equity investments in for-profit companies and lending facilities coupled with management services contracts for not-for-profit companies, depending on state regulations. When these investments are fully funded, iAnthus expects to have the broadest, most diversified network of investments in licensed U.S. cannabis operations in the industry.
Although private now, iAnthus plans to go public soon.
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