Explosive growth in M&A activity

Consolidation is a natural phase of any industry lifecycle, and cannabis is no different. As legal cannabis continues its rapid growth, the market is beginning a new phase of consolidation. There are many players now eyeing the cannabis market, including highly capitalized companies in traditional industries looking to enter the market via acquisition and established cannabis companies seeking to expand their footprint by absorbing competitors. With the current conditions, this year promises to be an explosive year for cannabis mergers, acquisitions, and expansion.

Recently, the industry saw one of its largest acquisitions to date. In March, Verano Holdings was recently snapped up by Harvest Health for $850 million, which was reported to be the industry’s biggest deal to date. The acquisition will create one of the country’s largest cannabis companies, with hundreds of retail and cultivation facilities.

The cannabis industry is in a land-grab stage, and the opportunity for Harvest Health to add so many retail facilities and cultivation centers was certainly a factor in the high price it paid for Verano. Large multistate players are rushing to stamp out their footprint, capture market share, and position themselves for further expansion.

On the other side of the coin, the need for cash is driving many smaller cannabis companies to offer themselves for sale. There are still many mom-and-pop operators that need capital and don’t have banks they can turn to for business loans. [Read More @ Cohn Reznick]