Copy of Highlights from the 7th Annual Cannabis Private Investment Summit in Miami
February 2 2022
Mia Di Stefano, conference attendee and M&A professional
For the first time since Spring 2020, over 170 accredited investors, family offices, entrepreneurs, pharmaceutical, cannabis, and psychedelic companies, and industry experts gathered at The Biltmore Hotel in Coral Gables, Miami, Florida to discuss investment opportunities in cannabis at Kahner Global’s Private Investor Summit.
The energy and the optimism of the speakers and the attendees reflect a maturing cannabis industry; as of 2022 recreational marijuana is legal in 18 states, Washington, D.C., and Guam and medical marijuana is legal in 37 U.S. states plus Washington, D.C.
In addition to the cannabis industry, 2022 marks the first Cannabis Private Investment Summit that addressed the burgeoning psychedelics market.
The conference kicked off with opening remarks by Noa Kahner, CEO and Founder of Kahner Global and was MC’ed by the memorable and charming JJ McKay, Founder/Publisher of The Fresh Toast. “I have worked with institutional and emerging investors for over 15 years, and am impressed by how the excitement and enthusiasm for an emerging cannabis industry has turned into a robust demand for smartly-run, agile businesses that are rising to the needs of a heavily regulated market,” says Kahner.
The first panel “The Legal Marijuana Industry: An Update on Federal Policy Reform” featured a robust discussion on federal cannabis policy including SAFE banking, the Cole Memorandum, state protections, and social equity. Just days before the conference, the SAFE Banking Act, which would provide additional protections to U.S. financial institutions dealing with cannabis companies in regulated markets was added to the America Competes Act, and panelist Saphira Galoob of the National Cannabis Roundtable noted that “federal regulations are coming, in addition to state regulations” and investors should welcome regulations as a sign of market stabilization.
Panelist David Feuerstein, partner at Feuerstein & Kulick noted that the recently legalized New York market is gearing up for adult use licensing and will set the tone for cannabis in 2022. “Everyone's watching New York. The old adage goes that the states are the laboratories of democracy. I think that is true in the #cannabis space. NY revenue is estimated to be $1.7-2B,” Feuerstein noted.
The following panel, “Trends in the M&A Landscape” was moderated by M&A attorney and consultant David Feldman of Skip Intro Advisors. He cited growing M&A activity in the industry and noted that the conference’s host state, Florida, was home to the largest ever cannabis M&A transaction. “Last year [2021], there were 306 M&A deals in cannabis, two times more than the year prior.“The panel discussed how an active M&A market is a sign of a rapidly growing and consolidating industry. The conference’s host state Florida, saw its largest operator Trulieve close on a $2.1B acquisition of fellow Florida operator Harvest Health, creating the largest and most profitable legal cannabis operator in the United States.
Right before lunch, conference founder Noa Kahner hosted an intimate conversation with Tony Cappell, Founding Partner of the Chicago Atlantic Group, titled “Investing in Private Loans in the Cannabis Industry: Taking Advantage of Mispriced Risk in the Cannabis Industry.” Chicago Atlantic Group is a debt-servicing company in the cannabis space that launched in 2020 to stellar results. Fund 1 in 2020 performed 19% net; 13% associated with income, 6% with equity kickers and in 2020 the firm did 13% net. Both years had zero defaults, which is quite the feat for an industry where financial stability is a lender's biggest fear.
Cappell noted that “From the outside looking in, cannabis is a gold mine industry,” however Chicago Atlantic’s strength was its due diligence on the operators. He encouraged investors to look at the metrics when evaluating potential investments. “What are the metrics that matter? Pounds per square foot, [the operator’s] electricity footprint,” he said, emphasizing that context matters: “It differs from market to market. What works in Pennsylvania would put you out of business in California.”
Another highlight of the day was The Investor Pitch Session, which brought together 5 companies for seven minutes in a tightly timed delivery. Moderated by three investors, Khadijah Adams (Private Investor), Brett Finkelstein (Private Investor), and Vikas Desai (Achari Ventures), the pitch sessions featured a wide variety of companies:
Adamo Biosciences, a psychedelics company laser-focused on the female libido, represented by CEO Molly Maloof
Philter Labs, an innovative smoke filter company focused on reducing second hand smoke for safer consumption, represented by CEO Christos Nicolaidis
Bada Bloom!, a Massachusetts-based social equity license applicant drawing inspiration from craft Italian wine growers, represented by Founder and CEO Michael Marinaro
iuvo Therapeutics, a Germany-based pharmaceutical company supplying high-quality cannabis-based medicines to patients within Europe, represented by CEO Jonathan Lubosch Haenisch
Biopharmaceutical Research Company, a federally compliant cannabinoid testing and research lab, represented by CEO George Hodgen
The afternoon featured a well-attended panel, “Raising Debt for Real Estate”, moderated by an institutional investor, Doug Walter, of the Broward County Firefighter Health Trust Fund and featuring two expert panelists, Rob Sechrist, President, Pelorus Equity Group, and Elena Mervine, Managing Director of Cohn Reznick. Real estate investments vary heavily by market at the state and local level, noted panelist Rob Sechrist: “In mature markets you might have an annual lease rate of $18/foot, in an emerging market those might be $30/ft. It compresses over time and we address that by giving short term loans.”
Fellow panelist Elena Mervine noted that the collateral value of real estate offered a sense of safety for investors in the cannabis market who could count on asset value to offset potential cash flow issues in investment targets.
The following panel, “Benefits of an Investment Fund in the Cannabis Industry” was hosted by cannabis investor Avi Weintraub and featured panelists Travis Goad, Managing Partner, Pelorus Equity Group, Mat Hawkins, Managing Partner, Entourage Effect Capital, and Chi-Chien Hou, Managing Partner AFI Capital Partners. All three panelists brought in their expertise as long-time financial industry experts, Matt Hawkins of Entourage Effect Capital said that he has a conservative approach to making private investments, and the key was to add hands-on value. “We're active minority investors & have significant belts & suspenders on covenants, we take board seats or are advisors. It's incredibly important to add value for our investors,” said Hawkins.
Later in the afternoon, Kevin McGovern of McGovern Capital moderated a panel on the well-tread topic of medical cannabis. Initially a skeptic, he was drawn into the industry after experiencing the healing power of CBD for his tennis elbow. Panelists Dr. Michelle Weiner, DO, MPH Spine and Wellness Centers of America, Jonathan Lubosch Haenisch of iuvo Therapeutics, and George Hodgin, CEO of Biopharmaceutical Research Company each highlighted their diverse experiences as a medical provider, a medical cannabis operator, and a testing facility respectively.
Perhaps one of the most awaited panels of the day, “Investing in Pharmaceuticals & Psychedelics” covered new territory for Kahner Global’s Private Investor Conference series. Psychedelics investments are on the rise, and though cannabis has minor psychoactive properties, there has been ongoing research on MDMA, LSD, ketamine, and other psychedelics for psychological treatment for decades. The long history of research provides an interesting problem for intellectual property.
Moderator Dustin Robinson, Iter Investments highlighted the issue: “In order to have a patent it has to be novel and non-obvious - LSD, MDMA, some of these compounds are not novel so folks are getting creative with patenting and patenting around the manufacturing process,” said Robinson.
Another area that scientists and pharmaceutical companies have had to get sharp on is how to measure the success of psychedelics. “When you look at clinical trials, part of how we measure the effectiveness is a clinical level of mysticism, how you experience god or your understanding of existence. These experiences are having medical outcomes for PTSD, etc.,” said Sylvia Benito, CIO of Justice Partners.
The conference closed out with a panel on investing in SSOs (single state operators) or MSOs (multistate operators), moderated by Matt Karnes of Greenwave Advisors with panelists Jason Kabbes, Partner at Bridge City Collective, Mike Goral, Cannabis Tax Partner at consulting company Armanino LLP, and Olivier Blechner, EVP of Business, Jushi. A key takeaway is that both multi-state and single state operators have their benefits and weaknesses as single state operators can develop a deep expertise in their market, but multistate operators can take learnings across markets to synthesize best practices.
The closing remarks of the evening brought the conference full circle with a more in-depth discussion on banking and regulations, titled “Banking Developments and their Impact of the Cannabis Industry and Investments” hosted by Stephen A. Lenn, Phoenix Managing Partner at Brennan Manna Diamond.
The day concluded with a networking cocktail reception graciously provided by Chicago Atlantic.
The Cannabis Private Investment Summit Series showcases the best and brightest cannabis entrepreneurs and is the premiere summit for institutional investors, family offices, and ultra high net worth investors. For additional information on any presenting companies, please email us at info@kahnerglobal.com.
