Massive cannabis M&A deals are coming fast and furious in 2021…
The Senate is gearing up to make moves on cannabis legalization.
And while federal action looms larger on the horizon with each passing day, recreational use laws are continuing their rapid advance state by state.
On April 12, New Mexico became the latest to join the recreational cannabis club when Gov. Michelle Lujan Griffin (D-NM) signed a bill opening yet another state to legal cannabis sales for any adult. That move came hot on the heels of New York passing its own recreational use laws not two weeks prior.
Meanwhile, Connecticut‘s governor is losing patience with his legislature, stating that should lawmakers not move, the voters will.
And Virginia‘s governor aggressively stepped up the timeline for adult-use implementation by a full three years, amending the legislation to take effect this summer rather than 2024.
As Gov. Griffin stated when she signed the New Mexico bill into law, “It is good for workers. It is good for entrepreneurs. It is good for consumers.”
That will be the primary motivation driving legalization – and cannabis sales – across the United States.
This hyper-motivation is good for cannabis investors, too.
Because this unstoppable state-level push will drive cannabis sales from $20 billion to $100 billion sooner than anyone dares imagine.
And with so much revenue at stake, these top multistate operators (MSOs) are wasting no time using their strong cash positions to extend their market dominance even further through massive merger and acquisition (M&A) deals…
East Coast Cannabis Markets Are Heating up
As the fifth-most populous state in the county and likely the next to transition from medical to recreational, Pennsylvania is ground zero for the M&A spree sweeping through the cannabis industry.
On April 20, TerrAscend Corp. (OTC: TRSSF) announced the purchase of three dispensaries for $63 million, expanding its footprint to 6 dispensaries in this valuable market.
That transaction follows Trulieve Cannabis Corp.‘s (OTC: TCNNF) acquisition earlier this month of three Pennsylvania dispensaries for $60 million.
And while these players focus on the Keystone State, Jushi Holdings Inc. (OTC: JUSHF) – which has already established a solid footing in Pennsylvania with 11 dispensaries – announced two acquisitions in just the last few days.
One was the purchase of Nature’s Remedy in Massachusetts for $110 million, the other a cultivation facility in Ohio for $5 million, expanding Jushi’s footprint to 6 states.
From the looks of it, an honest-to-god buying spree is indeed sweeping through the U.S. cannabis industry.
In fact, given the mergers and acquisitions so far this year, the first half of 2021 is on track to set a record pace…
Record M&A Spree
The chart below from Viridian Capital Advisors, an investment bank focused on the cannabis sector, shows the total number of M&A transactions between U.S. cannabis companies, broken down into six-month periods.
The prior record was set in the first half of 2019, right before capital markets shut down for cannabis.
But the environment has clearly changed. Cannabis companies with strong operating performance and strong leadership teams have no problems raising capital, which puts them in a position to buy up weaker, cash-strapped operators.
And the deals aren’t limited to the East Coast.
Earlier this month, Mercer Park Brand Acquisition Corp. (OTC: MRCQF), a special-purpose acquisition company (SPAC) focused on the cannabis sector, entered into an agreement to merge with Glass House Group and Element 7, which holds 17 proposed retail licenses.
The total value of the deal was $567 million and included an $87 million private placement alongside the SPAC investment. Once the deal closes, and assuming no SPAC redemptions, the combined company will have $355 million in cash to fuel even more acquisitions and expand retail operations with the licenses from Element 7.
I met with the co-founders of Glass House last October while I was in Southern California and experienced their impressive grow operations first-hand. I encourage you to check out the video tour here to see them for yourself.
As this M&A spree continues to heat up, we’ll see more and more moneymaking opportunities arise in the cannabis sector.
And with the real-time profit alerts and guidance you get as a NICI Membership subscriber, you’ll be in the best possible position to take advantage of those opportunities for the biggest potential gains.
Make sure you go here now to learn how you can join us (if you haven’t already).
Executive Director, National Institute for Cannabis Investors
2 responses to “With Strong Cash Positions, These MSOs Are Wasting No Time Extending Their Market Dominance Through Massive M&A Deals”
April 29 2021