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Marijuana M&A activity spikes as some cannabis pioneers cash out

mjbizdaily.com
Date:
Wednesday, Jul 11, 2018

Merger and acquisition activity is accelerating across the cannabis industry as more companies land multimillion-dollar capital infusions and ink deals aimed at growing market share.

The momentum is giving more company founders an opportunity to cash out at an attractive price – or leverage the deals to launch their next venture. The flurry of activity is a strong signal that the legal marijuana market is maturing as the industry’s early pioneers begin to exit.

As the first half of 2018 came to an end, more than 145 mergers and acquisitions had been announced since Jan. 1, according to Viridian Capital Advisors, a New York firm that tracks investment activity across the cannabis sector in the United States and Canada.

That’s nearly double the activity that was underway during the same period last year when 79 deals closed, according to Viridian’s Cannabis Deal Tracker.

“What you’re seeing is consolidation across the industry as companies like mine are going in and buying up dispensaries and building up their portfolio of assets in the major markets,” said Derek Peterson, founder and CEO of Irvine, California-based Terra Tech, which posted nearly $36 million in revenue in 2017.

‘Eager to cash out’

For Mason Levy, the M&A boom came at an opportune time – and allowed him to pursue a new business venture.

MedMen Enterprises signed a $53 million deal to acquire a Florida-based cultivator and the right to open 25 dispensaries in the state. The acquisition of Treadwell Simpson Partnership places MedMen – which operates 18 cannabis facilities in California, Nevada and New York – squarely in Florida’s expanding MMJ arena. That market is poised to become one of the nation’s largest. Aurora Cannabis inked a deal to acquire rival Canadian cannabis producer MedReleaf in a transaction valued at $3.2 billion Canadian dollars ($2.5 billion) that will create one of the world’s largest marijuana companies. California-based Kush Bottles signed off on a more than $1.5 million acquisition of CMP Wellness, a distributor of vaporizers, cartridges and accessories based in Los Angeles. In April, Kush closed a deal worth more than $3.2 million to buy Colorado-based Summit Innovations, a purveyor of hydrocarbon gas used by marijuana extract producers. British Columbia, Canada-based cultivator Emerald Health Therapeutics agreed to a CA$90 million deal to buy rival cannabis producer Agro-Biotech. The agreement expands Emerald’s footprint into Quebec, Canada’s second-largest province. 130 John Chiappetta on