Altitude Investment Management announced it has closed its first fund – Cannabis Fund I with commitments totaling $30 million.
Launched in March of this year, Fund I is currently invested in a diverse range of 16 early-to-growth stage companies engaged in the rapidly growing North American cannabis sector.
Led by John Brecker, Jon Trauben, Michael Goldberg, and Roderick Stephan, Altitude’s team have a combined 100 years experience in fund investment management, with a focus on alternative asset management.
“Over the past year we have watched the global legal cannabis market grow, change, and begin to mature,” said John Brecker. “At Altitude, we believe in the long-term growth of the industry–our portfolio strategy rests on this premise and we are confident that the evolution of the legalized industry will continue to provide compelling global investment opportunities.”
Spanning plant-touching operations, brands, and distribution, along with non-plant-touching companies providing compliance, agtech, advertising, marketing, and data solutions, Fund I’s portfolio includes Front Range Biosciences (FRB), a leading agricultural biotech firm specializing in tissue culture propagation of high value crops including cannabis, that closed on a $10 million Series A in early October.
As Fund I continues to deploy capital into next year, Altitude is planning the launch of Fund II in the first quarter of 2019 with a goal of securing more than $100 million.
“As the cannabis industry matures, more companies will require significant growth capital to fund product, service and geographic expansion,” said Michael Goldberg. “In addition, increasing competition will create the need for consolidation, merger and acquisition and distressed investment opportunities. A larger capital base in Fund II will ideally position Altitude to take advantage of these opportunities.”
A Need for Capital
The legal marijuana industry is still dealing with inter-state regulatory issues, and the lack of legalization on a federal level has left those operating legally within the sector with a lack of commercial credit, however, state-level legalization of recreational and/or medical marijuana continues to spread. Together with advancements in cultivation systems, the development of new strains, and the strengthening of supply chains, the market has been quick to gain a level of credibility.
As of March 30 of this year, eight states have legalized marijuana for recreational use, while another 20 states have laws in place that broadly legalize medical marijuana, according to Governing.com.
Combined rising credibility, increased legalization, and rapid growth lead to a universal truth for the need for capital.
In June of this year, WelCan Capital launched WelCan Capital Fund I – the first impact investment fund focused on the cannabis space and the “injustices stemming from cannabis prohibition”.
From its offices in New York and New Jersey, WelCan will manage the fund under its “people + purpose + profits” investment philosophy, focusing on four core verticals that are similar to areas of interest for Altitude: Plant-touching and Ancillary Cannabis Businesses; Business Services; Emerging Technology; and Software and Licensed Operations.
Fund I plans to invest in businesses that are ethically aligned with the firm, which envisions an ethical and sustainable cannabis industry on a solid footing toward long-term success. The fund also will give a percentage of its annual profits to select organizations and foundations that are working to help strengthen and foster a responsible cannabis industry.
The need for growth capital in the cannabis space was a point touched on not only by Altitude, but by WelCan too, as WelCan partner Vikas Desai stated in October, “The lack of institutional capital in the space creates a compelling opportunity for investors.”
Lynda Kiernan