Cannabis Weekly Round-Up: US Sales Over US$17 Billion in 2020 | INN

With a recently renewed financial boost and two significant deals among major players in the country, M&A looks set to bring in a new order for Canadian cannabis.

Meanwhile, as Canadian companies wait for policy changes below the border, M&A may help them position ahead of changes in the American legal landscape.

Recent deals push consolidation trend for Canadian M&A

Heading into 2020, a pattern of consolidation was expected for Canadian cannabis operators. However, complications from the financial uncertainty caused by the COVID-19 pandemic likely affected plans.

The latter half of 2020 and the start of 2021 brought some newfound momentum for cannabis investments; this came alongside serious developments in the Canadian marketplace that boosted the performance of operators, according to Nawan Butt, portfolio manager with Purpose Investments.

The tone for M&A between cannabis producers in Canada was set late last year, when Aphria (NASDAQ:APHA,TSX:APHA) and Tilray (NASDAQ:TLRY) announced a company union to investors.

The deal sent waves across the cannabis investing landscape as it combined two of the biggest names in the public markets, resulting in a company worth approximately C$5 billion.

Butt told the Investing News Network (INN) that the Aphria and Tilray deal was a great opportunity for each company to fill the other’s weak spots. “A great merger of equals, I would say,” he said.

Following confirmation of the transaction, Som Seif, founder and CEO of Purpose Financial, said the deal was a starting point for more consolidation in the Canadian cannabis space.

And the trend did in fact continue thanks to an all-share C$235 million acquisition deal struck between HEXO (NYSE:HEXO,TSX:HEXO) and fellow public producer Zenabis Global (TSX:ZENA).

“Canadian licensed producers (LPs) have been given a second lifeline of sorts here where the capital markets are back to support them and their balance sheets and put them back into growth mode,” Butt told INN.

What are Canadian companies looking for in M&A right now?

Narbe Alexandrian, CEO of RIV Capital (TSX:RIV,OTC Pink:CNPOF), formerly known as Canopy Rivers, told INN that just over two years after federal cannabis legalization in Canada there has been a critical evolution in terms of how deals are valued.

“At the time, when legalization was taking shape, it was always a race towards who had the most supply,” he said. “Fast forward to now, we’ve noticed that it’s not about who has the infrastructure, it’s about who has the eyeballs, who has…

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