Canadian Companies Acquire U.S. Cannabis Businesses Ahead of Legalization
The cannabis industry is now moving towards consolidation and globalization, as Canadian companies look to cross international borders by partnering with U.S. cannabis businesses.
Tomorrow, on Oct. 17, Canada’s adult-use cannabis market will open up to the public — and many of the companies operating in Canada’s new cannabis industry are not only focused on their own country, they’re also looking to purchase and partner with some of the United States’ top cannabis companies.
These acquisitions are part of what Forbes recently called a “wave of consolidation” in the cannabis industry.
Some of the consolidation is happening within Canada’s borders. For example, the report noted that, in July, two Canadian companies merged in the industry’s largest acquisition to date, as Aurora Cannabis purchased MedReleaf for $2.3 billion. The merger of the two licensed producers created a company with a potential annual yield of 570,000 kilograms of high-quality cannabis.
But increasingly, Canadian capital is crossing the border. In another deal noted by Marijuana Business Daily last week, Toronto’s Tidal Royalty cannabis industry investment house announced plans to purchase Alternative Medical Enterprises, a cannabis research firm based in Sarasota, Florida, for $8 million. Tidal Royalty has also made a $12.5 million investment in Oregon-based cannabis cultivator Diem Cannabis, according to the report.
Toronto-based Captor Capital, a vertically integrated cannabis company, also recently acquired Chai Cannabis, a dispensary in Santa Cruz, California, for roughly $6 million. The purchase added a fourth California retail outfit to Captor’s stateside holdings.
And Ottawa-based CannaRoyalty in April entered into a multimillion-dollar deal to acquire FloraCal Farms of California’s Sonoma County. One month earlier, CannaRoyalty acquired three other California outfits — cannabis distributors RVR and Alta Supply, and Kaya Management, a manufacturer of edibles and vaporizers.
Canada’s HollyWeed Announces Intent to Acquire Colorado’s Women Grow
Another notable acquisition was announced at the end of September, when the British Columbia-based cannabis consultancy and umbrella company HollyWeed North Cannabis issued a letter of intent to purchase Women Grow, a firm established in Colorado in 2014 as an educational and network king enterprise to promote women in the cannabis industry.
HollyWeed has multiple brands and is among nearly 600 companies applying to become licensed producers as Canada goes legal this month. It is seeking acquisition, which describes itself as “a for-profit entity that serves as a catalyst for women to influence and succeed in the cannabis industry.” While Women Grow operates in 17 states, its activities have recently started to contract amid leadership changes, as Marijuana Business Daily reports.
HollyWeed North CEO Renee Gagnon announced the letter of intent in a Sept. 28 press release. “For almost four years, it has been my pleasure to share in the phenomenon that is Women Grow,” Gagnon stated. “Women are the cornerstone of the cannabis industry and it is HollyWeed North’s goal to ensure that women succeed and thrive in this exciting emerging industry.”
The statement said that final terms on the deal will be announced at a later date, and that the transaction “is subject to due diligence and exchange approval.”
Canadian Stock Exchange Warns Firms Over Ties to U.S. Companies
Despite the trend of many Canadian companies acquiring U.S. cannabis businesses, there has also been some movement in the other direction.
The Marijuana Business Daily report also recalled that last year the TMX Group — parent company of the Toronto Stock Exchange and the TSX Venture Exchange — warned that companies with direct business ties to U.S. firms could be delisted.
This prompted some Canadian companies to divest their U.S. holdings. For instance, Ontario-based cannabis producers Aphria divested the last of its U.S. cannabis assets with the sale of Florida-based Liberty Health Sciences.
However, Aphria CEO Vic Neufeld called the move “only a temporary departure from investment in the U.S. cannabis industry,” and stressed that Aphria “intends to be a significant player in the U.S. cannabis industry at the appropriate time in the future.”
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