Learn to Earn

Departments - From the Editor

July 24, 2019

It’s no secret that mergers and acquisitions activity is on a steep ascent throughout the cannabis industry. In July alone, a number of significant transactions occurred.

Curaleaf Holdings Inc., a vertically integrated U.S. cannabis company, announced in a press release that it signed “a definitive agreement to acquire GR Companies Inc. (Grassroots), the largest private vertically integrated multistate operator, in a cash and stock deal valued at approximately $875 million.” Curaleaf CEO Joseph Lusardi commented in the release, “With a combined 68 open dispensaries, this transaction ... enhances the depth of our retail and wholesale platform across the country.”

Orchid Ventures, a California-based, multistate cannabis brand, entered “into an agreement to purchase assets from GreenBloom Cannabis Co., a vertically integrated cannabis operator with five retail stores, two cultivation facilities, one distribution entity and six brands across Oregon and California,” as we reported on CannabisBusinessTimes.com.

And the Supreme Court of British Columbia approved an arrangement between Supreme Cannabis and Blissco, “where Supreme Cannabis will acquire all of the issued and outstanding common shares of Blissco not already owned by Supreme Cannabis,” the acquiring company announced in a press release. In the release, Supreme CEO Navdeep Dhaliwal stated, “Supreme Cannabis will acquire Blissco’s facility built to EU GMP standards that has been extracting oils for the Canadian market since August 2018. Blissco’s scaled capabilities allow for Supreme Cannabis’s high-quality inputs to be processed in-house, creating a near-term large-scale extraction opportunity ....”

To help you keep track of major M&A deals, as well as help you navigate M&A transactions, we’re pleased to introduce in this issue the new “M&A Monthly” department—which features M&A highlights from our M&A Weekly newsletter (for which you can sign up to receive all the latest M&A news, plus insights and strategic information from experts, at: bit.ly/CBT_MAWeekly).

In light of the industry’s increasing M&A activity, predominantly among larger businesses, “Tomorrow In Cannabis” columnist Kenneth Morrow shares his perspectives on ways that smaller companies can survive and thrive amidst heavy consolidation and cutthroat business practices by applying strategies that are more common to larger corporations, such as controlling or owning various parts of the supply chain.

This tactic is illustrated in part by Supreme Cannabis’s acquisition of Blissco—which effectively brings in-house extraction infrastructure and expertise under Supreme’s control.

That tactic also plays a significant role at Pacific Reserve, this issue’s cover story subject. While it was not via an acquisition, the Salinas, California-based company sought out and was awarded licenses for processing, manufacturing and distribution to accelerate the owners’ vision for controlling their supply chain and destiny.

Whatever your end game, it’s essential to keep your eye on other players—within the industry and beyond—and their strategies. As Warren Buffett said, “The more you learn, the more you earn.”