Global cannabis investment fund Artemis Growth Partners has signed a landmark new deal with Tenacious Labs to create the ‘largest cannabis investment platform in Europe’.
The pair have now joined forces to launch Artemis Tenacious Group, combining the investment and market expertise of Artemis with Tenacious’ operational prowess to create a new ‘financial supermarket for cannabis’.
Artemis Tenacious Group’s formation comes amid what its board describes as a ‘step-change’ in the global cannabis industry, with the passage of CanG in Germany and numerous major reforms making progress in the US poised to ‘start to see corporate dollars showing up’.
William Muecke, Co-Founder and Chief Investment Officer of Artemis Growth Partners, told Business of Cannabis: “I think that we are positioning ourselves for big finance.
“If the BlackRocks of the world want to come to the table and say, ‘I need to be in this space’, it’s going to take them a while to gain their own expertise. So why not buy a KO investment platform just as banks buy hedge funds?”
Artemis Tenacious Group
The deal represents the ‘natural outgrowth’ of a relationship the two companies have had for around a year.
Mr Muecke explained: “We weren’t looking for a partner; we didn’t have a need for expansion or capital. It was Cutbill Jacoby who introduced us to Tenacious, and we happened to hit on a number of different synergies, operationally, philosophically, and politically.
“Before we had any idea of a transaction, we were already in a relationship that had positive outcomes for both parties.”
The creation of Artemis Tenacious Group marks an effort to ‘equitize this relationship’ and ‘align long-term incentives’ between the two companies, by creating a holding company for their combined operations.
This holding company will be helmed by Tenacious Labs’ Co-Founders Nick Morland and Adrian Clarke, alongside Artemis’ managing partner Stanton McLean and Mr Muecke.
Mr Clarke, member of the Bacardi family and founder of boutique investment firm Delarki Industries, of which Mr Morland is also managing partner, made a ‘significant minority investment’ in Artemis Growth as part of the broader deal.
“(We) are all aligned to look out for both businesses, cross-pollinate opportunities, and develop new platforms, whether they are operational or investment.”
New opportunities
The tie up will provide benefits both for investors and the portfolio of companies under the newly combined umbrella.
As the ‘de facto largest investment platform in Europe’, which now manages over $400m in discretionary assets, Mr Muecke explained that he wanted to leverage this position to ‘go out and raise more capital to invest, both under the Tenacious Labs framework’ and under Artemis’ existing investment strategy.
Tenacious’ current model, he explained, acts ‘almost as a venture lab’, encompassing digital marketing, content development, brand management, operational oversight, financial controls, and PR’.
“What Nick and the team have been doing is finding high quality assets that, for whatever reason, are able to be purchased on a control basis into Tenacious… strip out the cost and run it almost as a shared services backbone to a portfolio, then these companies are able to be profitable almost day one.”
Mr Morland suggested that there were ‘lots of really, really good quality businesses at excellent prices, but they’re incomplete’.
By having the ability to identify these ‘target rich’ companies and provide them with the expertise, capital, or services they need to become a complete business, the group believes it can provide a major value-add for all involved.
“That’s an aspect that we have marketed to our investors to say, look, we can bring these services to the Artemis portfolio on a wholesale and bespoke basis. We want to have a value capture for investors, coming to Artemis, we want to make sure we have a product that meets anyone’s needs,” Mr Muecke explained.
‘Symptomatic of a step change’
The tie-up comes just weeks after the passage of Germany’s CanG bill, which itself marked the culmination of months of positive regulatory change across the European theatre.
Rather than planning its launch in an effort to capitalise on the growing momentum of positive sentiment towards the sector, Mr Morland argues the company’s formation is ‘symptomatic of this very step change’.
“The conversations we’re having throughout the industry have changed from whether it’s a good idea to do it, to the complexity and mechanics of actually executing it. It’s the start of the next stage.”
“Yes, there are some real challenges… But at the same time, if you’re an investor, you’re seeing something where the changes become inevitable. And at the same time, because of the barriers to entry, you can really make some disproportionate profits.
“I think where I’m sitting from an investment perspective, this is the starting gun moment. If we’re one of the first few to make that next move, fantastic. But what we’re very much hoping for is that the others follow us.”
