3 latest acquisitions in the cannabis industry

By @chelean on
A notice board is seen near customers waiting to purchase products inside MedMen, a California-based cannabis company store
A notice board is seen near customers waiting to purchase products inside MedMen, a California-based cannabis company store serving medical prescription patients with cannabis products, on the store's opening day on 5th Avenue in Manhattan in New York City, U.S., April 20, 2018. Reuters/Mike Segar

Many marijuana companies have been expanding their businesses through acquisitions as of late, and such actions have propelled the cannabis industry into great heights, taking its consumers and investors along for the ride.

A recent report gave a positive forecast for the industry, stating that it will keep growing and even expand threefold by 2022. It also said that the market value of the global legal cannabis industry will reach US$32 billion (AU$43.23 billion) in the same year and that the surge in the value is anticipated to come from the US, reportedly contributing US$23.4 billion (AU$31.61 billion).

Additionally, the industry also has a bright future ahead because of the recent developments in the legalisation of cannabis. In the US, many states have already legalised the plant, with Vermont as the most recent state to permit people in possessing marijuana for recreational use.

Meanwhile, Canada is getting closer to the goal as according to CTV News, its federal government has given the green light on the marijuana legalisation bill. However, some significant amendments, such as the Senate trying to modify the bill with regards to allowing provinces to prohibit home-grown marijuana, were not accepted.

What the latest news could mean for the cannabis industry is that there is a possibility of an increase in demands, as more people can now purchase cannabis products. And it could be overwhelming for businesses within the industry to deal with the possible skyrocketing of demands. So to prepare for such surge, they expand their businesses, and some chose to acquire other companies. Here are some of the cannabis companies that recently made some acquisitions this year.

1. Aurora Cannabis-Anandia Laboratories

Canada-based cannabis producer Aurora Cannabis (TSE:ACB) has recently completed an all-stock acquisition deal with Anandia Laboratories, and the transaction was valued at approximately US$88 million or CA$115 million (AU$118 million).

Anandia is a cannabis biotech company based in Vancouver, British Columbia, and according to its website, it aims to bring “a scientific understanding of the cannabis plant for the benefit of the growers and patients.”

Aside from the acquisition, Anandia is also busy with the construction of its Cannabis Innovation Centre, which will accommodate its program focused on breeding cannabis and genetics. Thanks to the deal, Anandia will receive additional resources for the construction.

“Partnering with Aurora, with their expanded financial resources, scientific expertise, and multiple cultivation sites, will enable us to accelerate our current breeding efforts to create the next-generation of cannabis genetics,” Dr. Jonathan Page, the CEO and co-founder of Anandia, said.

Terry Booth, the CEO of Aurora, said that thanks to the acquisition, his company will receive a boost in the development of its products, per CBC News.

Aurora is fresh off the heels of another acquisition deal with Capcium, a manufacturer of soft gel capsules. The transaction was worth US$10 million (AU$13.51 million), and the former purchased 19.99 percent of the latter.

This deal would allow Aurora to produce softgels that contain cannabis. In addition, Capcium will use the proceeds from the acquisition for the construction of a production facility that will handle its usual nutraceutical and pharmaceutical business, as well as cannabis. A soft gel manufacturing operation from Capcium will also be established at the Aurora Vie production facility.

Capcium co-founder and chairman Mitch Greenspoon considers the deal as a “game-changer.” “This is credibility and endorsement from one of the largest players in the space. They’ve looked in detail at our expertise and the plant that we intend to bring online, and they’ve said these are [the] guys that we want to partner with. It’s extremely transformative for us, as a young company,” he added.

2. MedMen Enterprises Inc.-Treadwell Simpson Partnership

The second latest acquisition in the cannabis industry is the US$53 million deal (AU$71.60 million) between American cannabis company MedMen Enterprises Inc. (OTCMKTS:MMNFF) and Treadwell Simpson Partnership, specifically its cultivation and dispensary assets.

Under the deal, the cultivation facility of Treadwell Nursery will also fall into MedMen's ownership. MedMen will be in the position to open 25 dispensaries of medical marijuana in Florida.

According to Adam Bierman, the CEO and co-founder of MedMen, “This acquisition is right in line with our strategy of establishing a presence early on in high potential markets with limited licenses and large populations.”

3. PotNetwork Holdings, Inc.-Blockchain Crypto Technology Corporation

The last in this list is the acquisition of Blockchain Crypto Technology Corporation by PotNetwork Holdings, Inc. (OTCMKTS: POTN).

POTN is known for its CBD-infused products for kids, adults and even pets, with subsidiary Diamond CBD distributing these products. However, it just ventured into the cryptocurrency space thanks to the said deal with Blockchain Crypto Technology Corporation, a mining facility.

Along with the facility, POTN also received 115 mining rigs. The acquisition introduced more variety in its investments as well, and it paved the way for bigger returns for its investors.

The company continues to receive one great news after another as it announced that Diamond CBD's online sales last May have maintained their upward trajectory and received a whopping 639 percent year-over-year increase. Specifically, POTN recorded US$669,000 (AU$903,790) worth of total sales from May 1 to 27.

Going over its stock, POTN is looking to be in great shape because of the SuperTrend line positioning itself above the latest stock price levels of the company, possibly signalling that the stock is “entering buy territory.” The SuperTrend is used as an indicator to tell investors if it is the right time to buy or sell the stock.

To elaborate, the company's William Percent Range is recorded at -76.98, and if it reaches above -20, it points out that the stock could be overbought. Meanwhile, its 14-day Commodity Channel Index (CCI) is at -78.48, and its 14-day Average True Range settled at 0.04.

These three cannabis companies all aspire to deliver great products and meet the impending surge in demands once the legalisation has kicked in. And with their recent acquisitions, it is safe to say that they are prepared to take on the bigger market.

Article written from press releases.