M&A activity in the cannabis space expected to pick up this year

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Mergers and acquisitions continue to find new targets in the cannabis industry

Mergers and acquisitions (M&A) have always been a relevant point in the cannabis industry. Since years ago, these actions have always played a major role in the expansions planned by various companies. During the period of 2018, a total of 324 M&A deals could be reported, which reflected a total of $7 billion in value. This was certainly a big jump compared to 2017 when 163 transactions worth $1.9 billion were reported.

Many people might have expected that trend to be on the rise during 2019, but it appears that was not the case. The industry began to pull back two years ago, and both the number and value of M&A deals were a clear reflection of that, with only 249 deals worth about $5 billion. While it is clear that the COVID-19 pandemic did not have a major impact on deal continuity, there is no doubt that space was certainly slowed.

As of the third quarter of 2020, there were only a total of 124 deals valued at $615 million, leaving aside the $4 billion reverse mergers between Aphria and Tilray Inc. On the other hand, it is also worth noting the number of cannabis mergers and acquisitions that were canceled in the last four years. One example is Cresco’s withdrawal from the purchase of Tryke Companies in 2019, when it reported the termination of 92 deals, with a value of more than $2.2 billion.

Given this data, one might expect 2021 to have even slower movement, but that has not proven to be the case. In May alone, there was substantial merger moves in the cannabis industry and that could be a good sign. Curaleaf Holdings Inc. is acquiring Colorado-based Los Sueños Farms, for example. Trulieve Cannabis Corp. also announced a $2.1 billion acquisition of Harvest Health and Recreation, a Florida-based brand, and more. As the year evolves, there are more experts expecting to see more such moves and it could mean that 2021 closes with good numbers.