With the US quickly rising to become the center of the cannabis investment universe, could the market see an increase in merger and acquisition (M&A) activity?
Multi-state operators (MSOs) have come a long way from their early days, and this year potential M&A among MSOs is receiving more attention from a hungry investor base looking for exposure to the US market.
The Investing News Network (INN) spoke with a collection of experts about what the M&A appetite may be for the MSOs, and how this activity could affect the development of the US cannabis marketplace.
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Policy talks reinvigorate investment rush for US cannabis opportunities
The US is in a tricky position when it comes to cannabis policy. At the federal level, the drug remains illegal thanks to a Schedule I designation as part of the Controlled Substances Act.
However, a number of states have moved forward with legalization programs despite that barrier, allowing the implementation of cannabis marketplaces as a way to generate reliable tax income.
Not every market is the same, though. Some states have elected to open only medical distribution, while others have gone on to offer recreational options after medicinal availability has taken over.
That’s where cannabis MSOs come in. These companies have secured assets and licenses to serve US state markets, and they have gained support from investors thanks to public listings in Canada on the Canadian Securities Exchange (CSE) and the NEO Exchange. Unlike Canada’s TMX Group (TSX:X) operated exchanges, the Toronto Stock Exchange (TSX) and the TSX Venture Exchange (TSXV), the CSE and NEO allow MSOs to list even though cannabis remains federally illegal in the US.
Though it’s progressing slowly but surely, America’s state-by-state rollout has resulted in a fractured landscape for the entire US marketplace. And while there are benefits to the current model as it stands, experts believe it’s clear some kind of federal policy is needed.
With that in mind, the cannabis industry has been looking forward to attention from Washington, and officials have warmed up to the notion of engaging with cannabis policy at some level. Thanks to Joe Biden’s move to the White House, discussions have started brewing about the possibility of meaningful new federal cannabis policies appearing this year.
Whether or not that will happen remains unclear, and the current wait-and-see situation when it comes to a timeline for policy changes has left experts calling for caution when it comes to MSOs.
Even so, Nawan Butt, portfolio manager with Purpose Investments, told INN he is seeing the larger MSOs shift from pursuing profitability to looking for growth given the “imminent change that they anticipate happening on a federal basis,” and the implications of these changes for the type of players entering cannabis.
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Butt, who oversees the Purpose Marijuana Opportunities Fund (NEO:MJJ), pointed to the recent acquisitions of Bluma Wellness (CSE:BWEL.U,OTCQX:BMWLF) and Liberty Health Sciences (CSE:LHS,OTCQX:LHSIF) by Cresco Labs (CSE:CL,OTCQX:CRLBF) and Ayr Strategies (CSE:AYR.A,OTCQX:AYRWF), respectively, as proof of his theory.
“What MSOs are essentially trying to do is get ahead of the floodgates opening up, because when a federal decriminalization of sorts happens … everybody can sort of come and establish themselves in the space,” he said.
“Everybody” refers to big-name corporations from the pharmaceutical, tobacco and even alcohol sectors with an interest in cannabis.
“(MSOs are) trying to get ahead of that very large swath of capital that could take away their competitive advantage,” said Butt. “They’re turning to full on growth mode right now.”
The hunt is on, what kind of assets will be targeted?
As investment interest shifts onto the US market and its operators, what kind of needs do these companies have at the moment?
According to Kacey Morrissey, New Frontier Data’s senior director of industry analytics, the intentionality of US operators is shifting as well.
Morrisey said while at first MSOs were in a competition to grab as many licenses or land facilities as possible, now strategic positioning has come into the fray.
Charles Taerk, president and CEO of Faircourt Asset Management, told INN the major differences between state markets have made the MSOs become more cautious with their M&A strategies as they expand into new markets.
Taerk, who manages the cannabis-heavy Ninepoint Alternative Health Fund, said MSOs are looking at states in which they don’t yet have assets. “They’re making an estimate on the relative strength of the different state markets. Because not every state is the same,” he said.
Given the differences in the state markets, said Taerk, who co-manages the Ninepoint Alternative Health Fund, the MSOs have to consider different approaches for entry.
He compared Pennsylvania and Texas — the two states have medical cannabis programs, but the southern state is lagging behind in the amount of patients available to purchase products.
“Pennsylvania has a very extensive list of allowable indications for medical cannabis and has close to 450,000 patients,” he said. “That’s why you’re seeing a significant focus in a state like Pennsylvania versus Texas.”
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The operators then have to consider state landscapes and potential future development, including the possibility of recreational sales becoming an option.
Taerk said he has noticed more MSOs moving to the M&A strategy of buying single-state cannabis operators as a way to increase their positions in a designated state. “Everybody’s reaching out to acquire footholds in those growing strong medical markets,” he told INN.
Morrissey added that disruption can lead to changes in opportunities for M&A. Due to the effects of the COVID-19 pandemic, she explained, cannabis operators were forced to urgently look at their technology to develop solutions for consumers who couldn’t go into dispensaries.
“We’re seeing not only the landscape of the national market change itself, but the types of operators and their strategies to operate within the changing landscape have been fascinating,” Morrissey said.
Could CPG deals actually be on table for US operators?
With the increased attention on the potential for political change in the US, one financial expert told INN there are sure to be investment deals or full on M&A related to a big-name consumer packaged goods (CPG) firms.
These types of investments are not new for cannabis at large, but a US-based cannabis company getting the backing of a CPG name brand would require policy changes from the country.
According to Dan Ahrens, chief operating officer and portfolio manager at AdvisorShares, the MSOs on his radar are preparing for these eventual changes in policy.
“(MSOs) are anticipating those walls coming down … All the MSOs that I’ve talked to are focused on executing right now,” he said. Ahrens manages the AdvisorShares Pure Cannabis ETF (ARCA:YOLO) and the recently launched AdvisorShares Pure US Cannabis ETF (ARCA:MSOS).
When asked what could make an MSO stand out in the eyes of a big-name corporation, Ahrens said it is a fool’s game to try to predict the outcome of acquisition deals like these.
“It also depends on the desires of that company, there are companies out there that don’t want to be purchased,” he said. “We do know a lot of those conversations are happening.”
Investor takeaway
The scales have quickly changed for US operators, and 2021 seems poised to prop them up into an even stronger spotlight, both for investors and potential M&A partners.
The attention on the development of the US cannabis states marketplace, which for the time being means MSOs exclusively in the open market, will be at the top of mind for investors and experts alike.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Ayurcann Holdings Corp. (CSE: AYUR) (the “Company” or “Ayurcann”) an integrated Canadian extraction company specializing in the processing of cannabis and hemp for the production of oils and various derivative products, announces the granting of stock options and restricted share units.
The Company has announced that it has granted incentive stock options to directors, officers, employees and consultants of the Company to purchase an aggregate of 1,000,100 common shares under the Company’s Stock Option Plan. Each option is exercisable at a price of $0.16 per common share, expires three years from the date of grant and vest six months from the date of the grant.
The Company has also granted restricted share unit grants, pursuant to the Company’s Restricted Share Unit plan, dated April 1, 2021, totaling 1,548,875 to certain eligible participants.
For further information, please contact:
Igal Sudman, Chairman, Chief Executive Officer and Corporate Secretary
Ayurcann Holdings Corp.
Tel: 416-720-6264
Email: igal@xtrx.ca
Investor Relations:
Ryan Bilodeau
Tel: 416-910-1440
Email: ir@ayurcann.com
About Ayurcann Holdings Corp.:
Ayurcann is a leading post-harvest solution provider with a focus on providing and creating custom processes and pharma grade products for the adult use and medical cannabis industry in Canada. Ayurcann is focused on becoming the partner of choice for leading Canadian cannabis brands by providing best-in-class, proprietary services including ethanol extraction, formulation, product development and custom manufacturing.
Neither the Canadian Securities Exchange nor its Regulation Services Provider have reviewed or accept responsibility for the adequacy or accuracy of this release.
News Provided by GlobeNewswire via QuoteMedia
Keep reading to find out more cannabis highlights from the past five days.
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Tilray delays critical shareholder meeting
On Thursday (April 15), Tilray (NASDAQ:TLRY) announced it will be postponing its shareholder vote on the fate of its merger with Aphria (NASDAQ:APHA,TSX:APHA). It will take place on April 30 instead of April 16.
Neither cannabis company offered an explanation for the change. Tilray has asked shareholders to participate in this vote regardless of how many shares they may hold. “Tilray stockholders who have not already voted, or wish to change their vote, are strongly encouraged to do so,” the company said.
This news came days after Aphria shareholders overwhelmingly voted in favor of the business transaction, with a total of 99.38 percent of shareholders voting for the deal to continue. Confirmation from Aphria Chairman and CEO Irwin Simon indicated the partnership was en route to being complete.
This past week Aphria also released financial results for the third quarter of its 2021 fiscal year, in which the firm highlights the overall direction of the company with the Tilray deal.
“We expect to have a tremendous runway for long-term sustainable growth as we build upon our existing foundation in Canada and internationally by increasing the scale of our global operations,” Simon said in a statement.
Cannabis retailer celebrates digital trend
As part of a celebration for April 20, otherwise known as 420, Fire & Flower Holdings (TSX:FAF,OTCQX:FFLWF) announced the dissemination of a non-fungible token (NFT) digital art piece.
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Bidding for the piece, named “Non-Fungible Toke“ started at a price of C$4.20. The retailer plans to donate the proceeds to two charities, Second Harvest and Less.
The latter is designed to counter the carbon footprint of blockchain technology, a common criticism drawn against the rise of NFTs and other novel technologies.
As of 11:00 a.m. EST on Friday (April 16), the NFT bid was up to C$169.11.
Cannabis company news
- The Valens Company (TSX:VLNS,OTCQX:VLNCF) issued its financial report for the first quarter of its 2021 fiscal year. In its results, the company highlights a net revenue uptick of 24.7 percent from the previous quarter, resulting in C$20 million for the period.
- Trulieve Cannabis (CSE:TRUL,OTCQX:TCNNF) closed a public offering of 5 million subordinate voting shares at a price of C$50 each for total gross proceeds of C$287.5 million. The company celebrated its financial position after an offering in January, which will lead to the pursuit of merger and acquisition targets.
- Australis Capital (CSE:AUSA,OTCQB:AUSAF) appointed Jason Dyck as its new chief science officer and chairman of the firm’s scientific advisory board. Dyck previously served as an executive at Aurora Cannabis (NASDAQ:ACB,TSX:ACB), leading the scientific efforts for the cannabis producer. “I look forward to providing AUSA with advice and direction in its scientific efforts towards bringing innovations to market with immediate and significant commercial appeal,” Dyck said.
- Truss Beverage, a cannabis drinks venture co-owned by Molson Coors Beverage Company (NYSE:TAP,TSX:TPX) and HEXO (NYSE:HEXO,TSX:HEXO), released the details of its new lineup of infused beverages. Six new drinks will become available around the summer and are intended to pair with the season.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
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Partnerships with Minardi Law , Minorities for Medical Marijuana, CultivatED, and the Georgia Justice Project will include clinics and virtual events across Florida , Georgia , and Massachusetts
Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) (“Trulieve” or “the Company”), a leading and top-performing cannabis company based in the United States announced today a series of expungment clinics located throughout south and central Florida as well as virtual events in Georgia and Massachusetts . The clinics are part of the Company’s celebration of the 50 th anniversary of 420.
During the month of April, Minardi Law has hosted expungment clinics and will be hosting two more as follows:
- Releaf Patient Appreciation Day, April 17 th ( Valrico )
- First Annual 4/20 Event ( St. Petersburg Beach )
At these clinics, an attorney will be present to review records and see if someone is eligible for a sealing or expungment of their records. As part of the events, Trulieve will be helping cover the costs for finger prints, legal fees, and court costs.
Trulieve is working with Minorities for Medical Marijuana (“M4MM”) to host a 4/20 Expungement Clinic, part of M4MM’s Project Clean Slate. This event will take place on Saturday, April 24, 2021 , from 9:30am – 4:30pm at Riviera Beach City Hall. Anyone seeking to take place in this event is required to register in advance at http://trulieve.cc/expungementpreregistration .
In addition, Trulieve is sponsoring the First Friday Series , a weekly virtual event from the Georgia Justice Project to help Georgia citizens with record restrictions, and is also sponsoring the Fellowship Presentation and Expungement Clinic being offered through CultivateEd and GBLS on Friday, April 23 from 3:00pm – 4:00pm . You can register for the Massachusetts expungement clinic in advance here: HTTPS://BIT.LY/2Q655KK
“Our mission as a company has always been to improve people’s lives,” said Trulieve CEO Kim Rivers . “We’ve always been dedicated to improving the communities we call home. Partnering with Minardi Law , Minorities for Medical Marijuana, Georgia Justice Project and CultivatED on these clinics was a simple decision for us; we encourage anyone seeking help with the expungement process to attend one of these clinics in your own state to start the process.”
For more information about Trulieve and the April expungment clinics, please visit www.Trulieve.com .
About Trulieve
Trulieve is primarily a vertically integrated “seed-to-sale” company in the U.S. and is the first and largest fully licensed medical cannabis company in the State of Florida . Trulieve cultivates and produces all of its products in-house and distributes those products to Trulieve-branded stores (dispensaries) throughout the State of Florida , as well as directly to patients via home delivery. Trulieve also has operations in California , Massachusetts , Connecticut and Pennsylvania. Trulieve is listed on the Canadian Securities Exchange under the symbol TRUL and trades on the OTCQX market under the symbol TCNNF.
To learn more about Trulieve, visit www.Trulieve.com .
View original content: http://www.prnewswire.com/news-releases/trulieve-announces-expungement-programs-in-several-states-as-part-of-420-celebration-301270340.html
SOURCE Trulieve Cannabis Corp.
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Seth Rogen’s New Cannabis Brand are Now Available at Apothecarium Dispensaries in San Francisco , Berkeley and Capitola
The Apothecarium is offering cannabis from Houseplant, the cannabis lifestyle brand founded by Seth Rogen and Evan Goldberg at its five California dispensaries. The Apothecarium has three San Francisco locations (Castro, SOMA and Marina ) and one each in Berkeley and Capitola (outside of Santa Cruz ).
“With the vast number of dispensaries in California , we put a lot of effort into identifying the right ones that align with Houseplant’s values,” said Seth Rogen , Co-Founder of Houseplant. “The Apothecarium shares the same commitment to creating a strong consumer experience that we pride ourselves on and we are thrilled to bring our three initial strains to their stores in the Bay Area.”
Houseplant is launching with three flower strains, all of which will be available at The Apothecarium, including: Diablo Wind (sativa), Pancake Ice (sativa) and Pink Moon (indica). Like their founder’s groundbreaking film “Pineapple Express”, Houseplant strains are named after weather phenomena. Each strain will be sold in a custom tin.
“We are so proud to be one of the very first dispensaries in California to offer Houseplant to our customers,” said Ryan Hudson , CEO and co-founder of The Apothecarium. “Seth, Evan and everyone at Houseplant love and respect cannabis as much as we do. We simply cannot wait to share their beautiful and delicious flowers with our guests.”
“We’ve been working with the Houseplant team for more than a year and are grateful to have a partner that shares so many of our values, including an emphasis on cannabis education, quality, reform of cannabis laws and beautifully designed, recyclable packaging.”
“Seth has been hands-on during the process, spending time with our store managers to make sure they know the products and how much care has gone into vetting and selecting the best strains. We think our guests are going to love Houseplant.”
About The Apothecarium
The Apothecarium is recognized as one of the nation’s premier cannabis dispensaries, with an emphasis on education via in-depth one-on-one consultations from highly trained cannabis consultants. The company was founded by three first cousins and two family friends in 2011. Our dispensaries are known for providing educational events that are open to the public at no cost — and for welcoming seniors, first-time dispensary visitors, and people with serious medical conditions. The Apothecarium’s flagship San Francisco dispensary was named the best-designed dispensary in the country by Architectural Digest . Patients and customers may order at our dispensaries or online for pickup or delivery at apothecarium.com [apothecarium.com] .
The Apothecarium is committed to giving back to the communities we serve. We have donated more than $400,000 in cash to community groups and nonprofits — plus more than $300,000 worth of in-kind donations.
All Apothecarium dispensaries continue to implement safety measures to protect guests and team members. Protocols include strict social distancing inside and outside the dispensaries, a mask requirement for everyone inside the dispensaries, no contact check-in procedures and ongoing sanitizing throughout the day.
CA Licenses: C10-0000523-LIC; C10-0000522-LIC; C10-0000515-LIC, C10-0000738-LIC, C10-0000706-LIC
View original content: http://www.prnewswire.com/news-releases/houseplant-launches-at-the-apothecariums-california-dispensaries-301270397.html
SOURCE TerrAscend
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