Apr 8, 2019

Expect to see a lot more M&A in the cannabis industry

Trimming buds off of marijuana plant. Photo: Helen H. Richardson/The Denver Post via Getty Images

The cannabis market is quickly maturing, and as it gets legal footing nationally in Canada, many of the bigger players are starting to take bigger chunks of the market through mergers and acquisitions.

"The cannabis market is ripe for significant consolidation, and the pickup we have experienced recently is likely only the beginning."
β€” Cannabis industry investor and analyst Alan Brochstein writes in Fortune.

Details: Consumer spending on legal cannabis is expected to rise to $16.9 billion this year after reaching an estimated $12.2 billion in 2018, according to a report from industry proponents Arcview Market Research and BDS Analytics.

  • The market saw large tie-ups last year with Constellation Brands’ $4 billion investment in Canopy Growth and Altria's $1.8 billion buy-in of a 45% stake in Cronos.

Last week, Cresco Labs announced it would acquire CannaRoyalty, "the largest acquisition of a public company operating in the American cannabis industry to date," Brochstein wrote.

  • "We should expect to see more transactions. ... The reasons they are consolidating is to gain scale in their operations as well as to lower their cost of capital. Additionally, the expanded presence helps them to extend and leverage their branding."
  • "While many of these companies will likely fade away over time as they are unable to compete and ultimately to justify their valuations, it is likely that we will see continued consolidation."

Watch this space: The most recent U.S. Farm Bill also is driving much of the industry's growth as American companies can now sell and market hemp products.

Go deeper

Debate night: Candidates' last face-off before Super Tuesday

Sanders, Biden, Klobuchar and Steyer in South Carolina on Feb. 25. Photo: Jim Watson/AFP via Getty Images

Sen. Bernie Sanders wants to keep his momentum after winning New Hampshire and Nevada, while former Vice President Joe Biden hopes to keep his own campaign alive. The other five candidates are just trying to hang on.

What's happening: Seven contenders for the Democratic presidential nomination are in Charleston, South Carolina, for the tenth debate, just days before the South Carolina primary and a week before Super Tuesday. They're talking about health care, Russian interference in the election, the economy and race.

Sanders to Putin: You won't interfere in any more elections if I'm president

Photo: Scott Olson/Getty Images.

Sen. Bernie Sanders sent a message to Russian President Vladimir Putin on the debate stage Tuesday, stating, "If I'm president of the United States, trust me, you're not going to interfere in any more American elections."

The big picture: It was unveiled last week that Russia has been interfering to boost Sanders' campaigns in an apparent attempt to strengthen President Trump's bid for reelection. Former New York Mayor Michael Bloomberg said that "Vladimir Putin thinks that Donald Trump should be president of the United States, and that's why Russia is helping [Sanders] get elected.

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