Growth in Mergers and Acquisitions in the United States and Canada

Forums CBD CBD Business Growth in Mergers and Acquisitions in the United States and Canada

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  • #9291
    Danielle
    Moderator

    United States cannabis companies are seeking to grow, by utilizing mergers and acquisitions, while Canada is seeking to consolidate in the industry. Looking back to the first half of 2019, the U.S. and Canada were closely matched where both countries had about 2.1 billion dollars of total consideration.

    Then in the second half of 2019 through 2020, Canadian mergers and acquisitions halted to almost a standstill, while activity in the U.S. remained strong. The dominance in the U. S. market was bolstered by large transactions in the first and third quarters of 2020.

    In the first quarter of 2021, both countries experienced growing activity, as the U.S. benefitted from an increase in acquiring public companies. The second quarter of this year for both the U.S. and Canada saw a completed mega merger deal in Canada, worth 4.5 billion dollars, while a 2.1 billion dollar deal was announced in the U.S.

    #9292
    Liz S
    Participant

    The United States cannabis industry is poised to continue growing. There are ebbs and flows in global markets, where industries experience a boon, continue to mature and then fade away. In recent years, the cannabis industry has been expanding. Cannabis is legal in 36 states, and although it is still not legal at the federal level, publicly traded companies which are in this industry are in the position to become prosperous.

    The potential for growth exists for any company handling cannabis. This can occur when full legalization is achieved in the U.S. The question is when federal legality will come. A report from an investment group was optimistic for this young industry. Several events will happen in the near future that will change and solidify not only the cannabis industry, but also those dealing with both the alcohol and pharmaceutical industries. It is predicted that within the next year, there will be federal legislation which will offer protection to companies willing to invest in the cannabis industry.

    Later, this anticipated legislation is expected to offer nationwide cannabis legality by 2026. When full federal legality happens, interstate commerce in the cannabis industry will begin, and the industry as a whole will be worth more, and will experience higher valuations. In additional to this financial aspect, cannabis and its derivative products will become more mainstreamed and this will lead to increased sales of these products.

    The analyst who authored this report estimated that U.S. sales of cannabis related products improved by 40% from 2019 to 2020. This percentage translates to 17.2 billion dollars. This number is predicted to more than double by 2025, and then to double again by 2030. It was further explained that mergers and acquisitions (M&A) will be turning points for more than 27,000 cannabis businesses already in operation. The consolidation into fewer, yet more valuable, operations is predicted. Due to the current regulations, this growth has not happened in its entirety.

    • This reply was modified 2 months ago by Liz S.
    #9294
    PrincessM
    Participant

    Some key facts to remember about cannabis growth are that cannabis is legal in 16 states, in Washington, D. C. and in several worldwide markets. Using a credit card to purchase cannabis products remains difficult, since many cannabis dispensaries operate on a cash only basis, as was discussed here with regard to the passage of the SAFE Act. In addition,technology is possibly the most significant factor and driving force in facilitating the cannabis industry’s largest growth opportunity.

    In less than twenty years, cannabis has risen to the forefront to become a large industry, for which the legalization of cannabis in 16 states, D.C. and in international countries, as mentioned, is a significant proportion of the industry as a whole. This growth brings about economic opportunities as well as its own unique challenges. A complex regulation picture and marketing restrictions can present obstacles, but the cannabis industry continues to succeed at overcoming these early challenges. Innovations in technology are making commercial opportunities possible.

    The cannabis industry is unlike other retailers because of the fluctuations in statewide laws, and also because of the constant changes in local laws. Cannabis retailers in the U.S. need to verify buyers’ identities and medical cards, for medicinal cannabis. They also have to calculate the amount of local taxes and track each individual purchase of the cannabis. They then must report to regulatory agencies for validation and enforce possession limits by each consumer. These steps for compliance for medicinal sales of cannabis are half of the battle, and are necessary steps.

    #9295
    Liz S
    Participant

    Verifying the customer bases and the available cannabis products are crucial for success. To grow cannabis businesses and the industry as a whole, retailers must also utilize online reporting for regulations.

    The cannabis business has started to see the importance of technology in most of the aspects of their business. This goes from management and point of sale to delivery and marketing automation. The legal cannabis industry is still young, and the concepts of sales and marketing remains a novel one. It is fortunate that the capabilities of cannabis technology are being adapted to rapidly. The cannabis industry is growing and evolving along with these capabilities.

    Since cannabis remains a federally controlled substance, online transactions utilizing credit cards is still difficult, and is the reason why many dispensaries operate on a cash only basis. Technological advances have fortunately made it possible for cannabis consumers to browse and order products online, but then pay in person. This translates to nine billion dollars in sales per year. Point of sale systems must accommodate this aspect of online-offline combination which is unique to the cannabis industry. Without these point of sale tools, dispensaries would miss a large proportion of their orders which are placed online, and would not have the means for which to collect payments.

    This aspect of payment collection seems simple compared to managing inventory. This is a challenge when selling cannabis products. Technology which is used in more established and less regulated areas might not meet the needs of the dispensary. Whereas restaurants might serve about 30 or 40 items on their menus, a cannabis dispensary is likely to have maybe 300, or more likely, as many as 3,000 cannabis products. There are large numbers of data required, such as serving size, or dosage, ingredients and type of cannabis strain.

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