NorCal Cannabis Secures $27.4M Series A Funding to Expand California Operations and Prepares for Potential IPO

VCBeat (WeChat Official Account: vcbeat) has learned that on January 30, NorCal Cannabis (“NorCal”), a vertically integrated cannabis operator based in California, USA, announced the completion of its $27.4 million Series A financing round. Lead investors included Cannabis Growth Opportunity Corporation (CGOC), JM10 Partners, and Cresco Capital. The financing round officially closed on December 1, 2018. Since its inception, the company has raised a total of $50 million.

NorCal Cannabis, founded in 2015 by Douglas Cortina and Jigar Patel, is the largest vertically integrated cannabis company in California. The company currently operates state-of-the-art production facilities, including a base of over 100,000 square feet dedicated to research and development, cultivation, production, and sales, as well as a leading network of delivery warehouses across the state.

NorCal Cannabis focuses on the research, development, and sales of medical cannabis. Leveraging over 50 years of cannabis cultivation experience in California, NorCal Cannabis has assembled an expert leadership team specializing in cannabis breeding, strain selection, and growth management. Over the past four years, NorCal Cannabis has demonstrated rapid growth capabilities, securing extensive business channels through vertical integration and strategic partnerships. Coupled with industry-leading pharmaceutical-grade biomanufacturing facilities, this has positioned the company at the forefront of serving both local patients in California and export markets. The company currently operates two dispensaries and is actively expanding to open ten additional locations, positioning it to become the largest dispensary operator in the state.

“NorCal’s leadership team brings extensive experience, and its nationwide distribution network is among the most advanced in the country, positioning it favorably in cannabis cultivation, extraction, branding processes, and dispensary network development,” said Jamie Blundell, President and Chief Operating Officer of CGOC. “California was the first state to legalize medical cannabis, and today, NorCal has become the largest vertically integrated cannabis operator in California. We are highly optimistic about NorCal’s significant potential, delighted to be part of its journey, and look forward to witnessing its new breakthroughs.”

NorCal plans to use the funds to complete the construction of its production and manufacturing base at its Santa Rosa campus, expand its statewide delivery platform, and enhance its retail and customer channels. With this financing, the company has also paved the way for a potential initial public offering in 2019.

The cannabis market is undergoing a major transformation. From a medical perspective, cannabis not only alleviates loss of appetite, nausea, and pain in patients with conditions such as cancer, but also demonstrates significant therapeutic efficacy for muscle spasticity, epilepsy, schizophrenia, insomnia, and the manic phase of bipolar disorder. In some cases, cannabis is the most effective medication with the fewest side effects, and cannot be replaced by drugs such as morphine.

Driven by the significant potential medicinal value of cannabis, the medical cannabis industry has emerged. Meanwhile, as global cannabis legalization advances, major cannabis markets—led by Canada, the United States, and Israel—have continued to relax regulations on their controlled markets, creating a highly favorable industry landscape. In the United States alone, 31 states have legalized medical cannabis, while nine states have legalized recreational cannabis.

In 2017, the global medical cannabis market was valued at $11.4 billion and is projected to grow at a compound annual growth rate (CAGR) of 19%, reaching a scale of $55.8 billion. Sales in the North American cannabis market reached $5.1 billion in 2016 and are expected to rise to $20 billion by 2021.

“As the cannabis industry continues to mature and more consumers shift from the black market to the legal market, NorCal is ideally positioned to capitalize on this growth, leveraging its genuine first-mover advantage and institutional knowledge of the market,” summarized Mr. Patel, President of NorCal Cannabis.

Cannabis Growth Opportunity Corporation (CGOC) is an investment firm headquartered in Toronto, Canada. CGOC’s investment objective is to deliver long-term returns to shareholders through capital appreciation by investing in private and public companies operating within the cannabis industry and its extended value chain.

JM10 Partners is a private growth capital fund that invests in emerging leaders in the U.S. cannabis industry.

Cresco Capital is a U.S.-based private equity investment firm dedicated to investing in the cannabis industry through its two committed investment funds. Since 2014, Cresco Capital has invested over $45 million in the cannabis sector.

(Compiled by: Tan Xin)