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Markets: New $200m London Cannabis Fund, Nestlé, Institutional Investors, Aurora et al…

LONDON-based investors Chrystal Capital Partners have announced plans to launch ‘Europe’s biggest cannabis fund’.

The corporate finance firm hopes to raise an initial $100m for its Verdite Capital Fund – launched last week, with a domicile in Guernsey – going on to take it to $200m through later fundraising.

In an article in the FT Kingsley Wilson, an investment partner at the firm, said: “We think this will be a highly-regulated industry in 10 years’ time.”

Chrystal Capital says it has an established global network of Single Family Offices, Ultra High Net Worth Individuals and private equity co-investment partners.  It helps fill the void left by the lack of institutional capital in the cannabis space.

World-Leading FMCG Brands

However, earlier this month the UK’s Financial Conduct Authority issued new guidance for cannabis firms wishing to list on the LSE, with this expected to presage the arrival of the institutions.

Further indications of the growing interest of the world’s leading FMCG brands entering the space have emerged with the partnership between Nestlé and a cannabis company.

Nestlé Health Science has partnered with Geocann, a US cannabis product manufacturer, to launch broad-spectrum CBD softgel formulations with a droplet delivery system known as VESIsorb.

The first large-scale batch of the softgels was produced in Switzerland, earlier this month, from Slovenian hemp.

The arrival of the major bands into the cannabis space is stuttering, due to the uncertainty caused by cloudy regulations, but as they becomes clearer, with initiatives such as the European Novel Food rules for CBD edibles, expect this to accelerate. 

$1.8bn Loss For Aurora

UK Peer Lord Mancroft is working with London-based AVIDA Global which has secured £1.9m to develop its 100-acre cannabis farm in North East Colombia.

The Aquis Exchange, and Canadian Stock Exchange, listed UK-firm the Sativa Group is to change its name to Sativa Wellness Group following its merger with Canadian business StillCanna.

In Canada, Aurora Cannabis reported fourth-quarter losses of $1.8bn, the result of a string of impairment and goodwill write-downs. It also reported a 5% fall in revenue to $72.1m.

BNN Bloomberg reports that Miguel Martin, the new chief executive officer, plans to win back lost market share in Canada by growing as much cannabis, as cheaply as possible, to sell at premium prices.

However, the current Canadian trend is for cheaper pot, a development that now accounts for roughly half of the market, it reports. 

Aurora produced more than 44,000 kilograms of cannabis in its fourth quarter, while selling just over 16,700 kilograms. 

Canadian firm The Valens Company produced 56 white label and custom manufacturing product SKUs in its third quarter of 2020, a 56% increase from 36 SKUs in the second quarter.

The SKUs were manufactured in partnership with over ten of the company’s customers and span its product categories from disposable vapes, vape cartridges, oils and oral sprays, to beverages and concentrates. 

The company says the increase is the result of new brand partnerships, white label and custom manufacturing agreements.

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