Why Cannabis Companies Will Be Targets For Mergers And Acquisitions In 2019
Palm Beach, FL – May 30, 2019 – As the global cannabis markets continue to grow and as the population continues to embrace CBD infused products, it is inevitable that non-cannabis companies with worldwide distribution networks will look to partner with cannabis companies to add CBD infused products to their existing brands. Companies like tobacco and alcohol may be some of the biggest players. A cannabis industry publication recently had a headline predicting that: “Mergers and Acquisitions will redefine the Marijuana Sector in 2019.” It said: “Nothing makes investors more excited than Mergers and Acquisitions. A big M&A has the potential to completely change an industry and provide a big pay-off for investors… The cannabis sector is beginning to snowball and attitudes in major markets are rapidly shifting in favor of legalization. In the United States, the Federal Government has already taken steps to legalize CBD products via the iconic Farm Bill and attitudes across major European economies continues to relax. The global legal cannabis market is predicted to be worth $146.4 billion by 2025. Cannabis legalization represents an opportunity for industries like tobacco and alcohol. Both industries have experienced declining sales, and recreational marijuana offers a way to reverse this situation. They will have to compete with existing operators and other entrants interested in the ancillary cannabis sectors, CBD for example. Companies who don’t move now will be forced to pay a premium and there’s already been a flurry of activity.” Active Companies from around the market with current developments include: Body and Mind Inc. (CSE:BAMM) (OTC: BMMJ), CannTrust Holdings (TSX: TRST) (NYSE: CTST), Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF), Cronos Group Inc. (TSX: CRON) (NASDAQ: CRON), Canopy Growth Corporation (NYSE: CGC) (TSX: WEED)
The article continued: “Cannabis and tobacco companies represents natural partnerships. Tobacco companies have experience in dealing with complicated regulatory hurdles and have access to vast distribution networks… like Big Tobacco, alcohol firms have been struggling with declining demand for their products across developed markets. Health concerns surrounding alcohol have hastened declining drinking rates. Beverage companies are particularly interested in marijuana infused beverages, a market that is predicted to be worth $600 million in the US alone by 2022. The race to identify new acquisition targets is on. New entrants into the cannabis market are looking to take advantage of its many ancillary industries, in particular CBD. Investors and big companies are likely eyeing small, relatively established, players…”
Body and Mind Inc. (CSE:BAMM.CN) (OTCPK:BMMJ) BREAKING NEWS: Body and Mind, a multi-state operator, and Australis Capital Inc. (CSE: AUSA, OTCQB: AUSAF) (“Australis”) are pleased to announce that Australis exercised 12,793,840 common share purchase warrants of the Company (the “Warrants”) at an exercise price of CAD $0.50 for gross proceeds (the “Warrant Proceeds”) of CAD$6,396,920. Upon exercise, Australis received 12,793,840 common shares (the “Warrant Shares”) of the Company. The Warrants were issued to Australis pursuant to an investment agreement entered into between the Company and Australis dated October 30, 2018.
The Warrant Proceeds were used, in part, to fully repay an outstanding senior secured note (the “Note”) in the amount of US$4,495,890.41 owing to Australis by the Company. Payment of the Note included the principal amount of US$4,000,000 including accrued interest and an early repayment fee. The remaining Warrant Proceeds will be used for working capital purposes.
Scott Dowty, CEO of Australis and a director of BaM commented, “We are pleased to exercise our remaining Warrants in BaM. By doing so, our ownership of BaM’s issued and outstanding shares increases to 36%. Their improved balance sheet will allow BaM to expand its operations and further access accretive opportunities to increase shareholder value.”
Robert Hasman, President of Nevada Medical Group and a director of BaM commented, “This is a great transaction for both companies and our strategic partnership with Australis has provided BaM with tremendous opportunities as we grow our key platforms and quality lifestyle brand. The expertise of the Australis management team combined with the Australis network is industry leading and will be invaluable as we focus our attention on strengthening our key franchises and expansion into new markets.” Read this and more news for BAMM at: https://www.financialnewsmedia.com/news-bamm
In other industry developments and happenings in the market this week include:
CannTrust Holdings (TSX: TRST) (NYSE: CTST) recently announced that it has launched a cannabis education portal with Well.ca. This resource is available to Ontario residents through Well.ca, with additional provinces to launch soon. “Our goal is that every Canadian has access to credible, balanced information and advice about medical cannabis,” says Peter Aceto , CEO of CannTrust. “At CannTrust, the medical market has always been our primary focus and this relationship with Well.ca further establishes our commitment to leading innovation and our belief in the powerful medicinal value of cannabis.”
Choom Holdings Inc. (CSE: CHOO) (OTCQB: CHOOF) recently announced that Specialty Medijuana Products Inc. (“SMP”), of which Choom Holdings Inc. is a 9.8% equity stakeholder, has received a cultivation license on an additional and contiguous site in Sooke, B.C. The license was issued and effective on May 17, 2019 .
“As a stakeholder in SMP, we are thrilled to see SMP receive an additional license from Health Canada.” states Chris Bogart , President and CEO of Choom. “As a cannabis retailer, we cannot be more excited to have another craft focused cultivator from B.C. available in the market in the coming months. With the nation-wide cannabis shortage we’re experiencing in Canada , the addition of a licensed production facility focused on craft grown product for the legal market benefits us as a retailer immensely.”
Cronos Group Inc. (TSX: CRON) (NASDAQ: CRON) recently announced that it has entered into a multi-year supply agreement with MediPharm Labs Corp. MediPharm Labs will supply Cronos Group with approximately $30 million of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to $60 million over 24-months. In addition, Cronos Group and MediPharm Labs have entered into a multi-year tolling agreement, where Cronos Group will supply bulk cannabis to MediPharm Labs’ state of the art extraction facility in Barrie, Ontario, to fulfill certain additional processing needs of the Company.
“As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products,” said Mike Gorenstein, CEO of Cronos Group. “Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall.”
Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) Les Serres Vert Cannabis Inc. (“Vert Mirabel”), a subsidiary of Canopy Growth Corporation and a portfolio company of Canopy Rivers Inc. recently announce that it has received its final cultivation licence from Health Canada. All 700,000 sq. ft. of operating space at Vert Mirabel is now licensed for cannabis production. Vert Mirabel was established in December 2017 between Canopy Growth, Canopy Rivers, and Les Serres Stéphane Bertrand (“Bertrand”).
“We are thrilled that the operational infrastructure at Vert Mirabel is now fully online with over 500,000 sq. ft. already in production,” said Olivier Dufourmantelle, Chief Operating Officer, Canopy Rivers. “Vert Mirabel is a key asset for Canopy Rivers as it provides exposure to a commercially scaled source of locally grown, premium quality cannabis for distribution into Québec and across the country.”
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