Cannabis derivative company raises $6.5m from institution

CannaVest, a manufacturer and distributor of hemp derivatives, closed a $6.5m financing with an undisclosed institutional investor.

CannaVest, a manufacturer and distributor of cannabis derivatives from hemp has closed a $6.5 million financing with an undisclosed institutional investor. The funding will provide the company with additional working capital as it continues to rapidly expand its customer base and sales channels, according to a press release.

“Our sales efforts are moving to the mainstream, including the natural foods channel and eventually food, drugs and the mass market,” Joseph Dowling, chief financial officer of CannaVest, told Agri Investor.

To date, the company has raised about $20 million from friends, family, high net worth investors and family office investors, Dowling told Agri Investor. He added that the last financing is the company’s first institutional round and a sign of the company’s institutionalisation.

CannaVest develops, produces, markets and sells end-consumer products containing industrial hemp-based compounds with a focus on cannabidiol (CBD). This federally-legal substance can be used in foods and nutritional supplements for consumer health and wellness benefits, and is also used by the pharmaceutical industry for a variety of therapeutic purposes.

Regulatory filings show the financing is structured in tranches. CannaVest will receive four tranches of $500,000 each, and a final two tranches of $2.25 million subject to terms.

“We very carefully selected our partner in this financing, and after talking with multiple investors interested in our company, we selected the investor willing to invest in our company’s fundamentals and bet on the future success of our operations,” Michael Mona Jr, CannaVest’s chief executive, said in a statement. Mona said unlike many investors in small-cap companies, this investor is willing to negotiate and agree on terms that will support CannaVest’s efforts to provide value to its stockholders.

Cannabis-focused investments have increased in popularity recently. Tumbleweed Holdings, a New York based cannabis investment firm, is on the hunt for new acquisitions for its growing business. And rapper Snoop Dogg, together with a number of venture capital firms, invested in Eaze, a start-up company offers cannabis delivery service to verified patients, in April. This follows other high profile cannabis investments such as the Founders Fund investment into cannabis private equity firm Privateer Holdings earlier this year.