This is just the start of the Trifecta of Cannabis Catalysts playing out as we speak…
Surging sales, acquisitions, liquidity – that’s how we’ve been telling you the Boom phase of cannabis would play out over the next few months.
And we said that this Boom will mint millionaires left and right, provided you know how to trade it.
Well, our prediction is already coming true.
This transaction comes on the back of the prior week’s $1.5 billion acquisition of Weedmaps parent company WM Holding Company by Silver Spike Acquisition Corp. (Nasdaq: SSPK).
That was preceded by Subversive Capital Acquisition Corp.‘s (OTC: SBVCF) $500 million roll-up of four privately-held California operators to create the largest revenue-generating California-focused cannabis company.
And those deals followed the $130 million spent by Schultze Special Purpose Acquisition Corp. (Nasdaq: SAMA) to secure its acquisition of Clever Leaves, which shareholders approved last Monday.
Now, Tilray’s transaction is a bit complex, but one thing is clear. Acquisitions, the second of the three main catalysts propelling cannabis stocks through the Boom phase, has progressed from spark to full-blown flame.
All this deal-making will serve as a catalyst that supercharges the Boom – spurring even more of the billions in capital earmarked for cannabis sector acquisitions sitting on the sidelines into action.
And as this dynamic unfolds over the next few months, the third catalyst – liquidity – will alight.
I’ll unpack this “Holy Trinity” of catalysts for you in a moment.
But first, let me give you the lowdown on this just-announced, multibillion-dollar acquisition…
Boom-Inducing Buyers Market
Upon shareholder approval, Aphria shareholders will receive 0.8381 shares of Tilray for each share of Aphria they hold – based on Tilray’s closing price of $7.87 on December 15. That means Aphria shareholders will receive $6.60 worth of Tilray stock for every share of Aphria, a 19% discount to Aphria’s closing price of $8.12 per share.
Basically, instead of Aphria paying a premium for Tilray, Tilray paid a 19% discount for Aphria.
Either way, the economics are the same. Tilray shareholders picked up Aphria for a discount.
As I write this, Tilray’s stock reflects this “bargain price,” trading up over 24% percent today, while Aphria shares are up modestly.
The deal creates a venture with a $3.9 billion market cap and combined revenue of $685 million, making it the largest Canadian licensed producer (LP) by sales.
Aphria’s CEO, Irwin Simon, will be CEO and Chairman of the combined entity, Aphria shareholders will own 62% of the new company, and the entity will operate under the Tilray name with no effect to current owners of Tilray stock.
So, even though Tilray’s stock is the currency in this transaction, Aphria shareholders paid the price, they own the majority of the merged company, and Aphria’s CEO takes the helm.
Like I said – complicated.
But complexity aside, this transaction is just the beginning of the Trifecta of Cannabis Catalysts playing out in the cannabis sector as we speak.
Let me break down each of the three…
A Positive Feedback Loop of Millionaire Making Proportions
The first, surging cannabis sales, has been working its magic on cannabis stock prices for months.
Top multistate operators (MSOs) doubled, even tripled, in price this year – with some reaching all-time highs.
And this tremendous growth pulled in the first round of capital, adding even more fuel to the cannabis stock price flame.
This dynamic creates a virtuous positive feedback loop for anyone owning the right cannabis names today.
Early acquisitions like those by Schultze, Subversive, Silver Spike, and Tilray put a bid to valuations. Sales growth that’s doubling the size of the cannabis sector every two years continues to pull in more capital. Acquisitions accelerate and stock prices rise, sparking the third catalyst – Big Money pouring in through the liquidity provided by the New York Stock Exchange (NYSE) and Nasdaq.
That last catalyst, liquidity, will blow the roof off – driving cannabis stocks 20 to 30 times higher over the coming year.
Now, we’re just in the beginning phases of the cannabis boom.
But maximum profits will come to investors who buy the right stocks at the right time.
And that’s where NICI Membership comes in.
With our industry contacts, proprietary valuation model, analytical tools, and members-only database, NICI Membership offers subscribers the best cannabis stock insights in the industry.
Insights that let us see which companies are capturing the lion’s share of booming sales and which companies could benefit the most as acquisitions continue to heat up.
That’s why I’m personally inviting you to become a NICI Membership subscriber.
The process is simple.
Just go here now to learn how you can start making your cannabis stock fortune today.
Executive Director, National Institute for Cannabis Investors
4 responses to “The Catalysts Arriving to Supercharge the Cannabis Boom”
December 26 2020